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MP questions whether FSA withdrew pensions from Equitable Life

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Liberal Democrat MP for Eastbourne Stephen Lloyd has questioned whether the FSA withdrew its pensions from Equitable Life when it became aware of the problems within the firm.

Lloyd told Parliament yesterday during a debate about compensation for Equitable Life investors that a representative of the Equitable Members Action Group informed him that the FSA had prior warning of the state of Equitable and withdrew its investment.

He said: “I had a meeting with EMAG yesterday, and one of its representatives told me that - I cannot vouch for whether this is absolutely true - that because the regulators apparently knew a good few years before the company hit the buffers that its financial model was in such a poor state, withdrew their pensions from the Equitable Life package.

“If that is true, it is absolutely disgraceful. It demonstrates what an atrocious job they did and emphasises that there is a very strong moral case for the payment of fair and appropriate compensation, irrespective of the financial challenges we face.”

The Parliamentary Ombudsman’s enquiry into Equitable Life recommended compensation be paid to investors due to Government maladministration. The compensation suggested was between £4bn and £4.8bn.

The independent report by Sir John Chadwick has recently recommended that compensation of as little as £400m be paid.

A spokesman says: “The FSA has never engaged Equitable Life to provide pensions to new employees. The FSA’s self-administered occupational pension scheme is managed by a separate trustee company that is responsible for managing the assets of the scheme and appointing the investment managers.”

Money Marketing understands that there may have been an Additional Voluntary Contribution scheme available to FSA staff who joined from previous regulators.

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Readers' comments (27)

  • More misleading and innacurate information from those clever and greedy people in EMAG

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  • Surely that is just treating customers fairly. Well, some of them anyway.

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  • this would be dynamite if true!

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  • If the Government can rightly pay compensation for the failure of numerous regulators such as the FSA then should they not also pay compensation for all the other failures by the FSA (banking crisis etc.)?

    Why pay in once case and not another?
    These people (the regulators) were very highly paid after all, but none of them have suffered or had to pay for their mistakes unlike the Equitable Life victims.

    Where is the justice in that. No accountability whatsoever and we need to bring back accountability otherwise it is just going to be a never ending stream of compensation after compensation.

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  • Not like a politician to get his facts wrong and start spouting half truths.

    Surely Mr Lloyd would be better finding out the background before coming out with this. Starting the statement with "if this is true...." cannot be a replacement for doing his research properly.

    Then again, it always has been "do as I say, not as I do."

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  • The FSA should get a dose of their own medicine.

    Ask them where is the evidence regarding the decision to take the pension away from Equitable Life?

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  • As I recall, only a month before its collapse, the FSA approved Equitable's application to market stakeholder pensions.

    At the time, my comment on the FSA's failure to take action against Equitable was that because by the time it realised the seriousness of the situation it was too late to do anything to prevent what by then was an inevitability. So instead, the FSA just stood back and looked the other way. It's good at that.

    Now, it seems, evidence of this having been exactly what happened seems to be emerging. But has anyone at the FSA ever been called to account for what must surely constitute gross regulatory negligence? Seen any flying pigs lately?

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  • I am very sceptical about this. The EMAG member making the allegation should put up or shut up. He could very easily cite the source. Sounds to me like a gullible MP is being wound up. Try as I might I can't think of a reason why I or any other taxpayer should bail out the members of a mutual society who chose to believe the rash, irresponsible and undeliverable promises made to them by their own employees.

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  • Is that not close to insider dealing ? Ban all those involed at the time from working in Finacial Services

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  • Neil, I think the reason that we have to bail the pension investors out is that EL was a company regulated by the FSA who were asleep on duty!

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