In Reply to: Re: Ombudsman's enquiry into FSA re Equitable Life posted by KSquared on 02 July 2003 at 11:52:13:
: How "aware" do you think IBM Pensions Trust was when they decided to invest our money with Equitable Life and what comeback might they have on EL, or us on the Pensions Trust??:
To be frank, I think it most unlikely that anybody outside EL and the FSA understood the free reserve situation. It's natural to want to blame - but in this situation IBM invested the AVC fund in the company that at the time seemed amongst the best. I genuinely do not see why the Trustees could have felt with the knowledge available at that time that another home for the fund might have been better.
It is also interesting that the the ombudsman's report also said about why the FSA didn't stop EL taking on more business when the problems were known:
PO Overview Report Page 6 Extract from Paragraph 19
"FSA saw a need to balance the interests of new and existing policyholders and had decided that the balance was overwhelmingly in favour of Equitable continuing to write new business as all policyholders - new and old - would have benefited from a successful sale, and Equitable's withholding of seven months' reversionary bonus meant that new policyholders were not being asked to subsidise the costs arising from the House of Lords' ruling"
So even when there were known - potentially terminal - flaws - the FSA still thought it right that EL took on new business. They see no problem that those people buying were unaware of both GAR problems and the lack of an astute reserve level. And the FSA see's nothing wrong with that. Also the statement is incorrect because there were no bonuses in 2000. There are also several other technical flaws in the report that indicates that the ombudsman is either technically deficient, has had the wool pulled over her eyes - or is simply out of her depth.
Sir Gordon Downey's views - he was Parliamentary Commissioner for Standards, 1995-98 - views in the Times today about the ombudswoman's findings are at the link below. 'Nuf said.
GG