Treasury Committee chairman Andrew Tyrie MP called the FCA's handling of information about the probe "an extraordinary blunder."
In a statement released just before 6.30 pm on Friday (28 March 2014) the FCA said: “The FCA Board acknowledges the concerns of the market regarding today’s press coverage of the FCA’s proposed supervisory work on the fair treatment of long standing customers in life insurance.
"The FCA put out a(n earlier) statement of clarification this afternoon. The Board will conduct an investigation into the FCA’s handling of the issue involving an external law firm, and will share the outcome of this work in due course”.
Press reports over the past few days revealed that the Financial Conduct Authority will soon announce a probe into over 30million old insurance policies.
According to press speculation, there are concerns that providers of pensions, endowments, investment bonds and life insurance policies sold in the UK between the 1970s and 2000, have been unfair to customers by levying excessive charges on those who wanted to switch provider.
According to the BBC, the policies could be worth £150bn and the investigation will look into policies which penalise savers who wanted to switch providers.

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Insurance firms' share prices plummeted today on the news – with Legal & General and Aviva among the biggest fallers on the FTSE 100 in London,
Details of the investigation are expected to be published on Monday.
Clive Adamson, the FCA's director of supervision, was quoted as saying: "As firms cut prices and create new products, there is a danger that customers with older contracts are forgotten. We want to ensure they get a fair deal. As part of the review we will collect information to establish whether we need to intervene on exit charges."
The FCA issued the following statement this afternoon on the matter: "The FCA publishes its Business Plan on March 31st that provides a picture of the key priorities and areas of work for the year ahead.
"The work on fair treatment of long standing customers in life insurance is a supervisory piece of work. We enter into this work to gain a better understanding of how this area functions. We will be looking at how people in closed accounts are being treated.
"These accounts have been closed for many years in some cases, but there are still valid issues to be looked at around the question of the service that consumers receive in relation to those accounts. Are they getting the right information? Are they getting the right level of service? Are these investments still appropriate?
"We will be reviewing a representative sample of firms who we expect to look at whether they are treating their customers fairly.
"We are not planning to individually review 30million policies, nor do we intend to look at removing exit fees from those policies providing they were compliant at the time.
"This is not a review of the sales practices for these legacy customers and we are not looking at applying current standards retrospectively – for example on exit charges. This work will commence in the summer and we will be speaking to firms about how we can undertake that review.
"As a forward looking regulator, we want to examine areas that are of interest and relevance to consumers and to firms and assess whether there is an issue that requires any action. No conclusions have been reached as work has not started."
• Commenting on the announcements made by the Financial Conduct Authority regarding a review of the life insurance industry, the Chairman of the Treasury Committee, Andrew Tyrie MP, said: "There may be merit in the proposed review but the immediate issue is not the conduct of the industry but of the regulator.
"The principle that market sensitive information is released accurately to all participants at the same time appears to have been breached. This announcement may have led to a disorderly market in shares. It may also have damaged consumer confidence in the industry as a whole.
"On the face of it, this is an extraordinary blunder. It is crucial that we have a full and transparent explanation about how such an apparently serious mistake came to be made by our financial services watchdog - the body appointed by Parliament to enforce high standards of conduct.
"The FCA has a statutory duty to investigate cases of regulatory failure but it cannot be permitted to investigate itself. The board has announced that it will involve an external law firm in its investigation. More than that is needed."