Christopher Headdon, former appointed actuary and chief executive of Equitable Life, has been banned from holding a "significant management role" in any FSA regulated firm for the next six years.
In its Final Notice explaining choice of punishment, the FSA says the ban is linked to the failure of Headdon to disclose to the regulator all details of a 1999 reinsurance contract between Equitable and Irish European Reinsurance Company.
While Equitable officially signed a contract offering £800m of liability cover linked to guaranteed annuity rate policies, a so-called Side Letter separately indicated the firms could cancel the cover once claims reached the £100m level if they failed to renegotiate the deal.
”Cancellation of the treaty may have put Equitable in breach of the FSA's requirements and significantly weakened the regulatory balance sheet,” the regulator states today.
Headdon not only failed to notify the FSA of the existence of the Side Letter, but even went so far as to claim the £100m limit would not provide grounds for cancelling the reinsurance contract.
Failure to advise the FSA of the existence of the Side Letter was not an “inadvertence” on the part of Headdon, but rather represented a clear “decision on his part”.
Headdon, who resigned from Equitable Life on 1 March 2001, is one of 15 former directors still facing a £3bn lawsuit initiated by the subsequent board some two years ago.
According to company accounts for the year to 31 December 2001, Headdon received about £45,000 in fees, salaries and benefits - but excluding pension benefits - for his work in the first few months of that year.
In 2000 his remuneration on a similar basis was about £227,000. In 1999 he received about £96,000, including a £22,842 “business performance bonus”.
As of the 2001 accounts, Headdon had accumulated 22 years' worth of pension entitlement, which would offer an "accumulated annual benefit" of £95,900.
A note additional to the figures states: "As agreed by the former Board, C P Headdon is entitled to an undiscounted pension from age 55."
Headdon will be approximately 54 years old by the time his FSA-imposed ban expires.IFAonline
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