FSA chairman Sir Howard Davies has been attacked by the Treasury select committee for his handling of the Equitable Life inquiry.
Davies came under fire from MPs last week after he refused to allow Labour MP Jim Cousins to question FSA head of insurance Martin Roberts about his role in the affair as both DTI and Treasury head of insurance.
Davies also admitted that he could not force Equitable to write to policyholders explaining the situation because it did not have its full statutory powers.
Equitable also came under attack from MPs and IFAs for its continuing arrogance during the inquiry and blaming everyone but itself for the fiasco.
Chief executive Chris Headdon admitted he would not have needed to face the inquiry if the company had started reserving in 1993 when falling interest rates made guaranteed options more attractive.
He also conceded that guaranteed policies should not have been sold in the first place and admitted that Equitable had made a “significant” mistake in not effectively explaining the rationale behind its bonus policy.
But when challenged about why Equitable had not informed policyholders about the size of the potential liability, chairman John Sclater responded that it was in its statutory Treasury returns document, which runs to more than 400 pages.
According to Davies, Equitable also threatened the regulator with a judicial review at the end of 1998 when it was told to start reserving but subsequently backed down.
Cousins says: “We are being told we cannot question Mr Roberts about the period when he was employed by the Government. This is very unsatisfactory. His role in the affair is a continuing one that makes the FSA look like it has something to hide.”
Conservative MP Michael Fallon said: “So far this morning, you have blamed the Law Lords, the press and now you seem to be blaming the policyholders.”
An FSA spokeswoman says: “It is not obvious who is responsible to answer questions about a Government department that no longer has control over an area.”
Income Drawdown Advisory Bureau head of marketing David Marlow says: “Equitable were still showing arr- ogance to customers. We said they were going out on a limb with the way they distributed surpluses and did not give enough consideration to the what-if scenario.”
l Equitable inquiry, p12; Comment, p37