Equitable Life - Maladministration by Regulators

The Parliamentary Ombudsman to the UK Equitable Life case has concluded that the maladministration of the former Department of Trade and Industry, the Government Actuary's Department and the Financial Services Authority has contributed to the Equitable Life debacle.

Some of the mistakes made are:

• One person was permitted to play both the role of Chief Executive and Appointed Actuary for more than 6 years, this has weaked the Appointed Actuary's role as whistle-blower
• The calculations of solvency position was not challenged, the financial position of Equitable Life was not properly verified
• Misleading information was permitted to be provided to policyholders and potential policyholders
• Equitable Life was permitted to take credit for a reinsurance arrangement which had not been concluded

Two recommendations were made by the Ombudsman:

• The public bodies to apologise for the failure
• A compensation scheme to be set up by Government for those affected

The Ombudsman's report is 1,800 pages long but regulators may want to take time to read the report as it is certainly a valuable lesson learned although in the hard way.

Source: Ombudsman's Press Release