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
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
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's closure
to new business, despite the Halifax deal, than from Independent
In many ways, Equitable's new management has little choice but to try to
balance the books to meet the demands imposed by the House of Lords' 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.