Before it has reached the N2 starting line, the FSA is in crisis.
It is now time for some uncharacteristic bravery from Canary Wharf.
It will be difficult to shake the association with Independent and
Equitable Life. As every player in financial services knows, if you give a
dog a bad name, it tends to stick. In this case, the reputation may be
The FSA chairman came very close to advising Equitable policyholders when
he told them they might be better off waiting for a deal. IFAs will find
this particularly galling because, in its dealings with them, the regulator
appeared to assume that IFAs had to be stopped from profiteering rather
than aided in their efforts to help existing clients and newly created
The FSA must now detail its role with all the transparency it is demanding
of the industry and if officials are found negligent they should resign.
It must also be prepared to examine the debacle in its full context. Any
brave regulator would admit how well IFAs have done in coming to the rescue
of many Equitable clients and, more important, ask if a multi-tied
environment would provide such a robust check on other providers.
A brave regulator would also tell the Government that its stakeholder
pension risks creating several more Equitables as it forces medium-sized
providers to do unprofitable business for the next decade. It is difficult
to see how existing policyholders will not suffer detriment.
Finally, it should learn to trust IFAs precisely because they are