He says that reports of the potential for a £4bn compensation pay out have been “over-egged” as the Parliamentary Ombudsman report did not mention any particular compensation sum.
He says: “Ann Abraham stressed in her comments that financial loss should be assessed against what someone would have got from an average investment in an average company.
“When you apply that to a lot of the pension losses, particularly the guaranteed annuity rate holders who went through the compromise agreement, it is unlikely that there will be any compensation for them.
“The most likely financial compensation resulting from maladministration by the FSA would be the late joiners, people who put money into the fund as a result of reassurances that the company was not in financial difficulties when it was.”
Bayliss adds: “The irony is that the finger is being pointed at the FSA, which is a bit unfair, as there is no question that the people who did not perform their duties were the previous management.”
Compliance consultant Adam Samuel says the ombudsman’s recommendations for compensation are “broadly reasonable”.
But he adds: “Currently, vast numbers of customers have money tied up in with-profits funds that are declaring almost non-existent bonuses. How many such customers have a similar complaint to bring to those considered by the ombudsman with respect to Equitable Life?”
Samuel believes there is a case for pursuing the Treasury select committee’s recommendation in 2003 that these customers should be allowed to transfer penalty-free to a policy that meets the description of what they were originally sold.