Parlimentary Ombudsman Ann Abraham launched a broadside attack on the Government yesterday, accusing it for being too slack in its regulation of Equitable Life to heed warning signs which brought UK's oldest insurance mutual close to disaster.

She was giving evidence to the Public Administration Select Committee which has started an examination of her damning report released last July, which accused regulators – the Department of Trade and Industry, the Government Actuary's Department, and Financial Services Authority, acting on behalf of the Treasury – for being guilty of ‘comprehensive failure’, The Daily Telegraph reports.

Comparing Equitable to a ship about to go over a waterfall, she made a stinging attack of Government regulators, saying they were ‘mesmerised’ by the society and watching a disaster occur before its near-collapse in 2001.

‘Here was a long-established, extremely well thought of, highly successful society that had been that way since anybody could remember,’ she told the committee. ‘Somehow, although the stark facts were in front of them, they couldn't quite believe it. There was a sort of sense that “somehow it will come right”.’

Further reading:

JDS costs soar after Equitable case

E&Y faces penalties for Equitable Life role

Read The Daily Telegraph story