Thomson says the regulatory failings in the supervision of Northern Rock were of a completely different nature to failings in the supervision of Equitable Life.
He says: “Northern Rock is entirely different because the regulator seems to have been completely ignorant of what was going on and never talked to the company. With Equitable Life it asked the right type of questions but did not follow through and demand answers.”
Thomson adds: “I actually think light touch regulation is probably more likely to be effective than heavy as light touch looks at the detail rather than more important aspects such as a company’s business model.”
Thomson believes it will be difficult for the government to reject the parliamentary ombudsman’s call for compensation for Equitable Life victims in her report published today.
On BBC Radio 4’s Today programme earlier Equitable’s chairman Vanni Treves argued that the Government’s £20bn bail-out of Northern Rock would leave it no choice but to pay the smaller compensation sum due to Equitable victims, which is estimated to be around £4bn.
Equitable hopes to update the market in late summer or autumn as to whether a sale of the firm is likely.
Thomson says Equitable has had significant interest from parties wanting to see its data book, but declined to comment on speculation that Prudential may be considering putting in an offer.
He adds: “We have stabilised the business and got it into a position where the exceptional risks have been dealt with and the company now looks like a normal closed life company fund. What we are looking at now is the possibility of trying to do something better for our policyholders through a sale.”