This is not good news for Axa Equity & Law policyholders but it is not as bad as the fate suffered by many millions of investors in closed funds, many of whom are receiving no bonuses at all. An estimated 190bn is tied up in these investment vehicles, which are mainly with-profits funds. This represents about half of all with-profits investments. It is particularly galling, however, for Axa Equity & Law investors with memories long enough to recall that, back in 2000, Axa successfully applied to the FSA for permission to raid the Equity& Law fund of its orphan assets. In the light of what has happened since, the FSA ought to be feeling particularly guilty about having given Axa the go ahead but that has, no doubt, been conveniently forgotten. This is an area where all concerned have been advised by actuaries, whose reputation is less than pristine following their disastrous involvement in the Equitable Life debacle. Only recently, the profession was slammed by Sir Derek Morris in his interim report on the industry. Morris addressed a long list of issues raised by professionals about the industry’s performance, including allegations of arrogance, insularity and lack of transparency, and concluded that much of the criticism was justified, in particular where consumer interests are concerned. You do not need much experience of the profession to work out that he who pays the piper calls the tune. Just as members of the profession no doubt managed to persuade the regulator that orphan assets belong to the company rather than the policyholders who created the surpluses in the first place, so the profession has regularly sided with its paymasters in recommending everything from pension contribution holidays for employers to the reduction of benefits or closure of final-salary pension schemes. The surpluses generated within pension funds and orphan assets could be well used now to help plug the gaps in pension funds and to maintain bonuses to savers. But have the actuaries been held to account for their dismal performance, not least in the area of predicting long-term investment returns, supposedly their strong point? Not on your life. The reason why so many life companies have had to close funds is because they were badly advised by their actuaries. No doubt the same professionals are earning fat fees justifying the massive penalties charged to those investors with the temerity to remove their hard-earned savings from a closed fund. Actuaries are well aware that investors will eventually get weary of earning nothing on their savings and will leave. Whatever is left in the fund will be grabbed back by the life company, which is why the industry has so far resisted all calls to unitise these funds and allow investors to take a fair share of what is rightly theirs. This is where the FSA should step in. After its appalling decision to allow life companies to raid orphan assets, the least it could do would be to consider forcing those life companies with closed funds to unitise their funds and distribute the assets to investors. The FSA should take seriously the suggestions from John McFall, chairman of the Treasury select committee investigating the loss of public confidence in long-term savings. He recently called on insurers to let investors quit closed funds without penalty. He pointed out that: “The treatment of policyholders in closed funds is unfair. The insurance industry seems to be unique in preserving for itself the right to sell a customer one product and then substitute it with another that is inferior in key respects.” The FSA should examine McFall’s proposal for a regulatory requirement that solvent companies closing with-profits funds should, on request, transfer their customers without penalty to another supplier offering a product broadly similar to the one the customer originally bought. Or at the very least the FSA should embark on a review of what can be done to release investors in closed funds.