Treasury to grill FSA over Equitable
The House of Commons' Treasury select committee is to cross-examine the Financial Services Authority chairman over the watchdog's admitted failings in its regulation of collapsed insurer Equitable Life.
The hearing is scheduled to take place on 30 October and follows news that FSA chairman Sir Howard Davies received a lower bonus last year because of mistakes made by the FSA in its handling of the Equitable crisis.
Sir Howard’s end-of-year bonus for 2000 was Pounds 26,000, nearly Pounds 14,000 lower than in 1999.
Speaking on the BBC Radio Four’s MoneyBox programme on Sunday evening, Sir Howard admitted to receiving a lower amount in recognition by the FSA board of the problems at Equitable.
In addition FSA managing directors Michael Foot and Philip Thorpe also saw their bonuses shrink by nearly Pounds 9,000 to Pounds 21,150.
The internal report revealed poor communication between the regulator and Equitable and criticised the way it handled the reinsurance deal to keep mutual solvent.
The cross-examination of Sir Howard and other FSA officials in the Commons is to be followed by a session with Treasury economic secretary Ruth Kelly.
Kelly will be questioned on possible government liability over its involvement in the failings of the regulatory process, particularly in relation to advice given to public sector employees. The workers, principally from the NHS, were advised to invest in additional voluntary contributions with Equitable after the Treasury became aware that the mutual society faced difficulties.
MPs on the committee will later decide whether to proceed with a full inquiry of their own or simply leave the evidence taken on the record.
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Equitable probe prompts auditor review