Martin Wheatley, chief executive of the City watchdog, has already been stripped of his bonus of up to £115,000 following an independent review of the blunder which caused a share price plunge in the sector.
Mr Wheatley is now under further pressure after the Commons Treasury Select Committee said the regulator, which replaced the discredited Financial Services Authority, was still hampered by some of the same shortcomings.
It called for a series of reviews and changes which “amount to an examination of whether the FCA is suffering from a systemic weakness in standards and culture”.
Committee chairman Andrew Tyrie said the FCA had jeopardised its own objectives of protecting consumers and ensuring that markets function well.
Today’s report criticised the “shocking” way it mishandled the briefing of market-sensitive information to the Daily Telegraph.
A resultant newspaper report in March last year, detailing plans for an investigation into 30 million financial policies sold between the 1970s and the turn of the millennium, sent insurance shares tumbling.
It took six hours after the stock market opened for the FCA to make clear that the scope of the investigation was narrower than initially reported, and not likely to involve axing exit penalties on old contracts.