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FSA must lead by example to reveal its Equitable role

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

deserved.

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

Equitable refugees.

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

indepenendent.

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