The FSA had today been cleared of accusations that it had failed to protect consumers during the Equ...
The FSA had today been cleared of accusations that it had failed to protect consumers during the Equitable Life fiasco, as sharp words suggest consumers' expectations of the regulator's role are more the problem.
In a report out today, the Parliamentary Ombudsman Ann Abraham says that she has found "no evidence" to suggest that the FSA had fallen short in its regulatory responsibilities during its prudential regulation of the Equitable from January 1999 to December 2000.
According to the Ombudsman, there was also no evidence that the decisions, which the FSA had taken in relation to the company, were unreasonable as "it was never envisaged that the regime would provide complete protection for all policyholders".
But the regulator also faces underlying criticism as the report points out that there was an apparent "mismatch" between public expectations of the role of the prudential regulator and what the regulator could reasonably be expected to deliver.
On top of that, the Ombudsman adds her belief that this is the "key" to many of the complaints received in relation to the Equitable affair.
While such criticisms suggest the regulator is unable to protect consumers, the Ombudsman sweeps this under the carpet by saying that the FSA is conducting a "light touch" approach to regulation.
Adding that she has "the very deepest sympathy for those who have suffered financial loss as a result of events at Equitable", the Ombudsman says that the regulator's philosophy always has been that "market forces would provide the best means of ensuring that an industry met the needs of its customers" as to "avoid over-interference in a company's affairs".
The Ombudsman has decided that she will not investigate further complaints about the prudential regulation of Equitable, saying that it would be offering policyholders "false hope".
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