Rumours are rife across the industry that IFAs are being "leaned on" by the FSA to ensure clients do...
Rumours are rife across the industry that IFAs are being "leaned on" by the FSA to ensure clients do not transfer out of Equitable Life.
No IFA is so far willing to go on the record and confirm they are being asked to avoid advising on the Equitable issue where possible.
However, several sources have told IFAonline that financial advisers are nervous of even discussing Equitable Life - even though many feel policyholders should get out of Equitable Life as soon as possible - because doing so might prompt "a visit from the FSA".
FSA officials deny the claim and state regulatory policy has not changed. IFAs must advise consumers on a case by case basis, says an FSA spokeswoman, and recommend the best course of action for each individual client. The FSA reiterates that Equitable Life should not go into liquidation because maintaining the company is in the best interests of consumers.
This is the official line many IFA companies also take, but behind the scenes advisers are being told to avoid talking about the problem with clients if possible because companies are feeling pressure from the regulatory body to prevent money from leaving the life office.
At the same time, intermediaries argue losing some of the assets might be better for a client than losing all of their savings if Equitable Life goes under.
Sources inside the IFA sector allege the FSA is keen to prevent policyholders from moving assets from Equitable to another provider because it could substantially reduce the beleaguered life office's solvency margins, and perhaps even lead to collapse of the firm.
Interim accounts published earlier this month by the Equitable Life Board suggest the insurer has potential long-term liabilities - linked to compensation payments additional costs in its transfer of business to Halifax - of £860m, when the firm's free assets are thought to have dropped from £1.1bn to £400m this year.
In certain cases, IFAs who might be required to testify in support of the client at compensation court cases are now unwilling to do so because they are concerned about potential investigation by the FSA, says a lawyer dealing with mis-selling claims.
FSA officials have been keeping "closer interest" on some national IFA firms since March 2001, when companies first encouraged policyholders to transfer their assets from Equitable Life to another provider.
But it is networks and national IFAs who are being most watched by the FSA, say industry sources, as their clients hold a substantial percentage of Equitable's assets.
One industry insider says IFAs have to fight back and "ultimately have to decide which side we're working for - the client or the regulator" because their primary duty as IFAs should be to the client.
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