FSA assessment of Equitable Lifes compromise scheme

John Tiner, FSA Managing Director, said,

The FSA has already said that a successful compromise would, in principle, offer the best prospect of bringing stability to Equitable Lifes with-profits fund and so improving the outlook for policyholders. Having taken into account all the relevant considerations, we have concluded that the proposed Compromise now put forward is a fair offer for the rights and claims given up.

In a statement published on its website (copy attached), the regulator explains the basis for its opinion. It has assessed whether, for each relevant group of policyholders, the proposed Compromise offers a fair exchange for the rights and potential claims they are being asked to give up. The FSA is content that it does and that the Compromise does not give disproportionately greater benefits or disbenefits to some groups of policyholders.

John Tiner commented:

The FSA is not required to approve the proposed Compromise but it does have powers to take action in order to protect the interests of policyholders. We have concluded that, taken in the round, the Compromise is a fair offer and we saw no reason to intervene to stop the proposals being put to policyholders.

The FSAs assessment of the proposed Compromise does not constitute a recommendation by the FSA as to how individuals should vote; our view reflects the merits of the scheme overall. Individual policyholders must of course decide how they themselves vote in the light of their own individual circumstances.

The full FSA statement may be found at www.fsa.gov.uk.

Notes for editors

1. The FSA issued a release about Equitable Lifes draft proposals on 20 September 2001, Press Notice number 117.

2. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the appropriate protection of consumers; and fighting financial crime.

3. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.