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Eurolife in legal threat to FSA

Eurolife Assurance Company is consulting lawyers following a press release issued by the FSA detailing its investigation into the company and an out-of-court settlement.

Eurolife is writing to IFAs to clarify its position, saying that all allegations by the FSA have been dropped and were only related to procedural matters. It also claims that the FSA over-reacted.

EAC had been unsuccessful in a bid for its tribunal hearing to be in private and it settled before the case was heard. EAC was disputing a Treasury investigation started in June 2000 which concluded the firm had not been soundly and prudently managed. It stopped writing new business and in December 2001 the FSA ordered assets to be put in trust to protect the interests of policyholders.

The settlement, which was agreed on September 4, 2002, sees EAC managing director David Wootton stepping down and undertaking not to seek another senior management role in UK financial services. He remains managing director of parent Eurolife Assurance Group, owning just under 50 per cent of the company.

Chairman Lynne Green also agreed to step down but she is staying on as a director.

Wootton says the FSA would not have struck the agreement if it could have made the accusations stick.

He says: “I personally had arguments with the Government Actuary&#39s Department on prudential guidance notes. We would have been happy to come to the present arrangement a year ago. There is no question of insolvency or any policyholder having suffered. We are consulting lawyers as a result of the FSA&#39s press release.”

FSA spokesman Rob McIvor says: “It was Eurolife&#39s decision to bring their case to the tribunal and it was their decision to offer settlement.”

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