Equitable Life probe targets role of FSA

A special European parliament committee of inquiry into the near collapse of
Equitable Life is to investigate the role of regulators in accounting at the
life assurer.

The involvement of the Financial Services Authority in particular is to be

A parliament note said the probe would ‘assess allegations that UK regulators
(notably the FSA) consistently failed to protect policy holders by rigorous
supervision of accounting and provisioning practices and of the financial
situation of Equitable Life’.

It could also examine auditor Ernst & Young’s role in the scandal,
although decisions on the inquiry’s exact scope will be made clearer in coming
weeks. It has said though that British government financial controls will
definitely be looked at.

The parliament has launched its probe following complaints from
policyholders, especially around 15,000 non-British clients, mainly from Germany
and Ireland.

Humberside Liberal Democrat MEP Diana Wallis is to coordinate the reports.
She told Accountancy Age: ‘Some of these victims have been told to take a hike
by the UK authorities.’

The inquiry will look at how well European Union legal guarantees to non-life
insurance consumers have worked, and whether they have been properly implemented
in Britain.

‘I hope this inquiry will help us understand how we can do things better in
future, and when things go wrong our citizens have access to redress,’ she said.

The committee has 12 months to complete a report with an interim report after
four months.

It can hold hearings and invite British government representatives to
testify, although it cannot force them to appear. It can also request any
relevant documents. Its conclusions could inspire legal actions by national
regulators, although the parliament has no power to launch criminal or
administrative proceedings itself.

Other UK committee members include Kent-based Labour member Peter Skinner,
who said the inquiry could help the FSA and could ‘be a conduit’ for potential
reforms to EU legislation.

The FSA declined to comment.

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