Treasury Secretary Ruth Kelly MP today received a rather tame grilling by the members of the Treasury Select Committee, as she was accused not only of trying to shift the blame for the Equitable Life debacle to someone else but for also suggesting the government was in no way "passive" in the affair.
This morning's Committee meeting follows the publication of the Penrose Report last week, which gave rise to a public outcry after it was revealed the government had been cleared of blame but given a slap on its wrist at the same time.
When asked by a Committee member about the government's responsiblities for the whole affair - which saw thousands of former an current policyholders lose nearly or all of their savings - Kelly refered back to the Penrose report, saying he did not attempt to allocate the blame.
Although she admitted that "in hindsight we certainly accept that the regulatory system failed policyholders", she washed the government's hands free of any blame, referring back to Lord Penrose's conclusion to not make any recommendation for compensation as well as to a government report deeming that no blame could be pinpointed.
Kelly later pointed out it was in fact Lord Penrose who had set the boundaries of his report - a factor which may surprise many, given he seems to suggest the boundaries for review were set by the government.
Furthermore, she said these problems occurred in the company years before Labour came to power in 1997, adding the Treasury was not passive as it was the current government which set up the FSA, albeit the Treasury acknowledges the FSA's lack of resources.
Slamming down on her remark, another Committee member accused Kelly of trying to avert the blame to somebody else.
Kelly, however, replied she was not trying to do so, but said it clearly takes a period of time to overhaul a regulatory regime, adding the rules they were trying to change were inherited, and therefore left very little room for officers to manoeuvre.
Lord Penrose, who also attended the meeting, told the Committee when it comes to the regulatory failure "it would be for the parliament to look at these matters".
Later put under the microscope regarding Lord Penrose's statement, Kelly brushed away the accusation there had been any regulatory failure at all and added Lord Penrose probably meant the parliamentary ombudsman.
This remark made another committee member furiously add: “he clearly said the parliament, not the ombudsman.”
After outlining a raft of ways in which regulations have been reformed, Kelly later added financial education is one of the key changes now being implemented, which it is hoped, will in future help policyholders to fully understand the realistic expectations of their investments.
She said the implementation of Child Trust Funds is in part designed to help children learn about the risk of investments, as they will watch their equity investments "rise and fall" over time with the stock markets.IFAonline
What made financial headlines over the weekend?
Q2 net sales dropped almost 50%
‘Important to have an anchor’
Lack of innovation for solutions