Equitable Life: FSA Report

The Board believes that it is good discipline to learn the regulatory lessons from episodes such as this while acknowledging the fact that the Equitable remains solvent and has not failed.

Under these circumstances, the Board has asked the FSAs executive management to produce a full account of its regulation of Equitable Life for its consideration. It will cover the period from 1 January 1999 until the Equitables closure to new business on 8 December 2000. It will also set out the background and events leading up to the FSA assuming formal responsibility for prudential insurance regulation on 1 January 1999.

The report will be made to the FSA Board by a team led by Ronnie Baird, the FSAs director of internal audit, supported by external experts in accountancy and law.

The report will be completed as soon as possible but is likely to take a number of months to finish; as announced earlier this week by HM Treasury, it will be published.

The Board recognises that the report focuses on the FSAs role. The Board and executive management of the FSA stand ready to offer their full co-operation to the Treasury Select Committee in any inquiries it intends to conduct.

Notes for editors

The FSA Board comprises 3 executive directors and 11 non-executive directors. The non-executives are drawn broadly equally from the financial services industry and consumer groups.

These following terms of reference govern the FSA report arising out of the Equitable Life case.

1. The reporting team will be led by the FSA's director of internal audit, Ronnie Baird, who has been asked by the Board of the FSA to provide it with an independent account with the benefit of impartial professional support from external experts.

2. The report will cover:
   • the FSA's discharge of the functions (under the Insurance Companies Act 1982) which it undertakes as delegate for HM Treasury; and
   • the Personal Investment Authoritys (PIA's) discharge of its functions as a recognised self regulating organisation (under the Financial Services Act 1986).

3. The report will:
   • describe the background and events leading up to the FSA's assumption of responsibility for the prudential regulation of the Equitable Life on 1 January 1999;
   • describe the course of supervisory work from then until the society's closure to new business on 8 December 2000;
   • identify any lessons to be learned.

4. The report will access all relevant information within the possession or control of the FSA, the PIA, and their advisers.

5. The report will be made as soon as possible, though it is recognised that it is likely to take a number of months to finish. It will be published.