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FSA must come up with answers as Equitable axe falls

The grim conclusion from the Equitable Life debacle seems to be that

everyone who could have got out should have got out but it may now be too

late.

Equitable has proved to be a zero-sum game. The axe has fallen on

Equitable policies with a drastic 16 per cent cut in pensions while life

insurance plans face a 14 per cent cut through reductions to terminal

bonuses.

Thousands of investors will still find themselves in a Catch 22 situation

about whether to remain with Equitable.

There is vastly more consumer detriment resulting from Equitable&#39s closure

to new business, despite the Halifax deal, than from Independent

Insurance&#39s collapse.

In many ways, Equitable&#39s new management has little choice but to try to

balance the books to meet the demands imposed by the House of Lords&#39 ruling

for its guaranteed annuitants although Money Marketing will scrutinise its

actions to see if it really had to offer such harsh terms or if it is

guilty of an over-reaction.

But the second issue is the reaction of those responsible for regulation.

Clearly, the regulator and the Government faced dilemmas over Equitable as

it lurched from crisis to crisis before closure.

But in its attitude to the Treasury select committee, the FSA showed a

tendency to news-manage rather than find answers.

The decision to delay publication of the FSA internal inquiry is not good

enough.It should be a top priority.

By failing to come up with answers to what went wrong, the Government and

the FSA risk rubbing salt into the wounds of Equitable investors.

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