The FSA is facing calls for a two-pronged inquiry to investigate Equitable Life's closure to new business and to assess the strength of rival insurers to prevent a repeat of the fiasco.
As Money Marketing went to press, peers in the House of Lords were also planning to question the Government on how Equitable's problems could affect other areas of financial services policy such as stakeholder's cap on charges and moves to end polarisation.
The calls for an inquiry, by politicians, providers, IFAs and consumer groups, came as the FSA argued it had done all it could to stop Equitable Life closing to new business, potentially affecting 1.3 million people. But – besides the Equitable management – consumer groups, IFAs and pro viders place the blame firmly at the door of the FSA and the Government, with the Depart ment of Trade and Industry in particular under fire.
The Consumers' Asso ciation says the DTI should have acted far earlier to prevent the situation from spiralling out of control and wants an FSA inquiry to ensure that steps are taken to prevent future Equitables.
LibDem DTI spokesman Vincent Cable MP argues that the Government must conduct a full-scale review of the funding underpinning of the insurance industry.
Lord Newby was due to question the Government on how it plans to stop a run on Equitable policies. He also wants the Government to consider its proposals on polarisation and stakeholder reform and league tables in light of Equitable.
Treasury select committee members were also understood to be considering an inquiry.
Consumers' Association spokesman Mick McAteer says: “The DTI must have known before it handed responsibility to the FSA of the risk of exposure. They should have made the Equi table Life directors hedge the risk of this happening.”
Lord Newby says: “My main concern is whether or not the FSA is taking steps to ensure Equitable Life does not end up in liquidation as a result of a run on policies.”
Towry Law director Char les Levett-Scrivener says: “It is the fault of the regulators that the fifth-biggest insurance company can get in such a bad financial situation. The regulator has power without accountability. It should give up the power or accept responsibility.”
l Equitable debacle det ails, p2; Questions and answers, p14; Stay or go? p28; Comment, p29