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Moore&#39s code

“Do you think this is it?” a colleague asked despairingly as we picked up copies of Ronnie Baird&#39s fascinating report into the FSA&#39s handling – or should that be mishandling – of the Equitable Life mess. I had to reply in the negative.

After reading the report, however, my interest was tweaked anew. Sir Howard Davies is not the only employee of the regulator who should have a knighthood by the end of the year, if there is any justice. Baird, for his courage in producing a no-holds-barred, determinedly honest and, in places, devastating document, deserves nothing less.

Lord Penrose&#39s public enquiry into the Equitable will consider a much longer time period and has a much wider remit than Baird, who was only concerned with what the FSA did when it took over the situation last year.

If Penrose&#39s report is half as good he will have done millions of life insurance policyholders, not to mention the financial services industry, a great service.

But it is likely to be at least a year before we know whether Lord Penrose can stand in the same company as Ronnie Baird. A more immediate concern is the final form of the “compromise” plan which is supposed to put the society&#39s finances back on track if policyholders vote in favour.

When I first saw the consultation proposal, and we have no reason to suppose it will be anything other than almost exactly the same as the final version, my initial reaction was that the punters should just go for it, draw a line under the whole sorry mess and at least stabilise the situation. Now I am not so sure.

The Government, the Equitable, Halifax – which owns most of the society&#39s former assets – and the FSA all appear to agree that getting this through would be in the best interests of everyone. The fact that this lot are all in accord is in itself cause to ask questions.

If New Labour ever had a reputation for straight talking and honesty it has long gone and the FSA is clearly desperate to do whatever it can to limit the damage this affair, admittedly not of its causing, has caused to it.

Halifax wants to make a return on what it has bought and if the Equitable is still in a mess at the end of this year its directors may well be feeling some empathy with people who have invested in Equitable&#39s with-profits fund. Halifax Equitable, its shiny new brand, could be dead in the water. As for the Equitable, well the reputation of its chairman, Vanni Treves, is on the line. Odds on a knighthood then, anyone?

The problem with the Equitable situation is that it has been characterised by cynicism, spin, misinformation and sometimes downright lies.

This began right from when the society first began a disgraceful attempt to confuse and fudge the issues at the time it first embarked on a test case to decide whether its policy of cutting terminal bonuses for people taking up guaranteed annuities was legal or not.

Most of the policyholders I talk to are disinclined to accept anything it has to say, new board or not – and who could blame them?

The alternatives to voting in favour of the compromise, admittedly, do not look attractive. An unstable fund with most of its investments in gilts. Various groups of policyholders engaged in suing each other while lawyers grow fat. Continued resistance from the Government to doing anything to help a situation it was partly responsible for creating.

Even so, the difficulty policyholders and their advisers face is that it is almost impossible to work out whether the compromise being offered is a worthy proposal, whether it amounts to putting a band aid over a severed limb or whether it is yet another confidence trick on nearly a million people who have already lost millions of pounds.

If the Equitable is serious about proving it is the former it should lay itself bare and publish a detailed financial breakdown of its financial situation, not just some half-baked interim results and accounts promised with the compromise voting forms, as the Equitable Life Members Action Group has demanded.

At the same time the FSA should show some good faith by relaxing the restrictions on IFAs advising people on how to vote. It has to be said that the initial regulatory warnings sent out to IFAs shortly after Equitable&#39s failed attempt to sell itself and the resultant 5 per cent MVA sound rather hollow now.

Even policyholders who moved out after being swayed by the type of IFA whose interests were in pocketing a fat initial commission from transferring a policy would be better off than had they stayed put.

This may be the first example of a punter benefiting out of being churned. The sad thing is that those warnings seem to have put off ethical IFAs from justifiably advising the same thing.

The reason Baird was brilliant is that he brought something to the Equitable situation which has been lacking up until now – daylight. It is time for others to follow his lead.


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