Equitable Row Hits FSA

Updated:09:09, Friday October 31, 2003

The City watchdog and two Government departments look likely to be criticised in a report into what went wrong at troubled mutual Equitable Life.

The Financial Services Authority, Treasury and Department of Trade and Industry have been contacted by Lord Penrose in advance of the publication of his report.

Scandal reaches out

All three were responsible for the regulation of Equitable Life at various times.

They were sent draft versions of the sections of the report in which they are criticised about 10 days ago.

Hope

News that the three have been criticised will give hope to beleaguered policyholders at the mutual.

They are awaiting the outcome of the report to find out if they are likely to be able to pursue the Government for compensation.

However, it is not known how strongly they have been criticised or whether the criticism will be included in the final draft of the report once they have responded to it.

Meanwhile a Treasury spokesman sought to allay fears that only sections of the final report would be made public.

Investigation

"The presumption is that we will publish the report in full, but we will have to seek legal advice to ensure that is possible", he said.

Lord Penrose, a Scottish judge, was commissioned to investigate events at Equitable going back to the 1950s by the Treasury in August 2001.

Equitable ran into problems after losing a legal battle over the rights of its guaranteed annuity rate policyholders, which left it with a £1.06bn pensions liability.