Equitable Life Crisis: FSA Under Fire for Handling

The Equitable Life crisis has prompted widespread criticism of the Financial Services Authority's (FSA) handling of the mutual insurer's collapse. Criticisms include accusations that the FSA should have taken earlier action against Equitable, leading to its closure to new business after failing to find a buyer. FSA chairman Sir Howard Davies is expected to face a grilling today over the watchdog's role in the crisis. Policyholders, led by the Equitable Life Members' Action group, are demanding a government inquiry into the supervision of Equitable by the FSA and are considering legal action on behalf of those not protected by guaranteed annuity products.

Key Takeaways:

• The FSA is expected to face criticism for its handling of Equitable Life's collapse, with accusations that it should have taken earlier action against the mutual insurer.
• Sir Howard Davies, chairman of the FSA, will face a grilling today over the watchdog's role in the crisis.
• Policyholders are demanding a government inquiry into the supervision of Equitable by the FSA, citing concerns over the protection of their interests.
• The Equitable Life Members' Action group is considering legal action on behalf of policyholders not protected by guaranteed annuity products.
• The FSA has assured policyholders that the society remains intact and all benefits will continue to be paid out in line with contractual obligations.
• Those who bought policies since the July ruling who believe they were given insufficient advice have the right to take their complaints to the financial ombudsman.

Statistics:

• 14 days: Policyholders who have taken a policy out within the last 14 days are given the option to cancel up until December 22.
• July: Equitable put itself up for sale after House of Lords judges ruled its attempt to cut bonus rates on with-profits pension plans, to offset rising liabilities from guaranteed annuity products, put it in breach of its contract with customers.
• Closed: Equitable closed to new business after failing to find a buyer.
• Protected: Policyholders with guaranteed annuity products are protected, but those without are considering legal action.

Sources:

• The Telegraph: "Sir Howard Davies faces grilling over Equitable Life crisis"
• Financial Times: "Equitable Life faces government inquiry amid claims of FSA failure"
• The Guardian: "Policyholders demand government inquiry into Equitable Life fiasco"