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The Serious Fraud Office decided to drop an investigation into Equitable Life because financial regulators were already aware of potential criminal activity at the failed insurer, according to a new document.
The document also raises the possibility that every pension sold by the firm between 1982 and 2000 was mis-sold, according to the Financial Mail.
In a key passage the document states: '...in very many cases, transactions, activities and representations which might be considered to be criminal offences were known to the regulators.'
It added: 'It is therefore very likely that potential defendants would raise many defences based on having disclosed what they were doing to the regulators and having received their approval, or at least not received their disapproval.'
The 19-page 'vetting note' dating from December 2005 has been published following a Freedom of Information request.
The SFO probed the insurer in March 2004 after the publication of a damning report into its collapse by Lord Penrose.
But in December 2005 it angered policyholders by announcing it would not press ahead with a criminal investigation.
The Mail last month revealed how the SFO had been ordered to publish its reasons by the Information Commissioner's Office - a body set up to protect the public's right to data.
It followed a Freedom of Information request lodged two years ago by equitable victim Stephen Wynn.
The SFO ruled that prosecuting former directors could "lead to a further loss of confidence in the pensions industry as a whole", the Mail reports.
It stated there 'is a potential that all the Society's sales of pension products to individuals between 1982 and 2000 were mis-sold'.
However, it concluded: "This again is a matter for the regulator or for civil action and not for criminal prosecution."
The revelations have angered Equitable's policyholders who have been fighting for compensation for over a decade. The Coalition government announced a £1.5bn compensation package for victims last October, but victims say this represents a fraction of their losses.
The FSA declined to comment.
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If true - truly shocking.
Also can we have a light shone on the fact that in addition to this obvious malfeasance by the regulator they sought to defend and compound this by issuing regulatory warnings to advisers not to switch Equitable policyholders out. (A dictat which many of us actually ignored). When you set these actions by the regulator alongside the pain that was being dished out to the adviser community during the period in question I think these actions and policies also deserve not only explanation by greater independent scrutiny. Set this incident alongside the other (too many) breathtaking regulatory failures and one really does wonder whether all the money and pain has been for nothing. Perhaps they may have been better advised reworking the RDR to the RCR – The Regulator’s Competence Review.
Posted by: Harry Katz
It's good to be able
to agree with Harry on this subject. I remember the veiled warnings NOT to transfer clients away from Equitable too. I had never reccomended an Equitable with profits plan to clients (I inherited them), but had reccomended clients in the NHS to do AVCs using unit linked funds (which were not affected) Like Harry I looked at every case individually before advising clients what action to take and when.
Posted by: Phil Castle
Who? Me?
No doubt the FSA will have an internal investigation. They will discover this happened as a result of "collective intellectual failure" That way, no one is to blame and we can all carry on happily ever after.
Posted by: lol
In 10 years time
They will probably tell us they dropped the Keydata investigation as the FSA knew all about Keydata from day one. http://www.sfo.gov.uk/our-work/our-cases/case-progress/keydata-investment-services-ltd.aspx
Posted by: Nameless
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The Truth is out
The regulator knew that Eq Life was making false statements which were potentially criminal. Why did they turn a blind eye and why when the SFO investigated and then backed off was it felt acceptable to delay payment. Can individuals now claim via the the FSCS or will it simply be that will now be timebarred?
Posted by: Nameless