Regulation of Equitable Life did fail policyholders but it was the system, not the individuals, who failed, according to the Penrose report.
Penrose stresses that he does not “pin the blame on individuals” but says the regulation system failed to provide the regulation that the changing nature of the industry needed.
The Treasury, the DTI and the FSA have all been involved in regulating Equitable. The Government Actuary's Department has also been criticised, with Penrose saying no problem was considered so serious by the GAD that it could not be left until next time.
Penrose says: “As for the regulatory system, I do believe that it has failed policyholders in this case. The practices of the society's management could not have been sustained over a material part of the 1990s had there been in place an appropriate regulatory structure adapted to the requirements of a changing industry that happened to manifest themselves in an extreme form in the case of Equitable Life.”