A spokesperson for the financial watchdog confirmed that some employees had been given the option of setting up free-standing additional voluntary contributions (FSAVC) with Equitable while employed at four regulatory bodies that are now incorporated in the FSA.
He could not say how many employees still had FSAVCs with the struggling insurer, but said those employees that had such policies had been given the option of keeping these policies when the FSA was formed in 1997/98.
The spokesperson sought to clear up confusion regarding a letter in today’s FT alleging that staff at the FSA had pension schemes with Equitable.
‘The FSA set up fresh staff pension schemes when it came into being, not with Equitable Life,’ he said. He added that the FSA was not giving the individuals concerned advice on what to do now.
The FSA was formed when 10 regulatory bodies joined together to form one City watchdog. It is tasked with regulating the UK financial system, including the insurance market, under contract to the Treasury.
In recent months it has come under criticism for its role in the financial regulation of Equitable Life.
Last month parliamentary commissioner for administration Michael Buckley warned that he planned to investigate complaints about the ‘alleged failure’ of the FSA and other regulatory bodies, including the Department of Trade & Industry.
And in April the insurer’s new board appointed lawyers at Herbert Smith to investigate the role played by the FSA, the DTI and Equitable’s former executives who resigned over the crisis, to see if any legal action could be taken against them.
Meanwhile, mid-tier accountancy firm PKF has advised Equitable Life policyholders to seek independent financial advice when making future investments, rather than rely on the advice of Equitable representatives.
Matthew Welsh, regional director at PKF’s Financial Planning, said a number of policyholders were adopting a ‘wait and see approach’ without having a full financial review of their financial affairs.
‘PKF encourages a more informed decision from policyholders,’ he said.
The insurer ceased to write new business in December last year after it revealed liabilities of Pounds 1.5bn, following a Lords ruling on GAR policies and now operates as a closed fund.
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