Former Equitable chief Headdon hits out at six-year ban by FSA

Chris Headdon, the former chief executive of Equitable Life, hit back at the Financial Services Authority yesterday after being issued a six-year industry ban, saying the move was yet another attempt by the regulator to deflect criticism away from itself.

Chris Headdon, the former chief executive of Equitable Life, hit back at the Financial Services Authority yesterday after being issued a six-year industry ban, saying the move was yet another attempt by the regulator to deflect criticism away from itself.

The FSA yesterday confirmed that Mr Headdon would be banned from all regulated activity in the financial services industry until May 2010.

Mr Headdon was set to fight the ban at a hearing of the Financial Services & Markets Tribunal next week but dropped his appeal at the last minute.

The FSA's charges against Mr Headdon related to a letter written to Equitable's reinsurer, the Irish European Reinsurance Company, in January 1999, which he withheld from the regulator when it questioned him several weeks later.

The letter laid down an extra clause relating to Equitable's reinsurance, providing for the contract to be cancelled in the case of claims exceeding a certain level. The FSA said that such a cancellation could have left Equitable in breach of its regulations, hence the letter should have been disclosed.

Andrew Proctor, the FSA's enforcement director, said: "Mr Headdon should have provided information to the FSA about the side letter to the reinsurance contract and as a result of his failure to do so the FSA has concluded he is not fit and proper.

"The FSA sets high standards by which we judge senior management. This includes the requirement that individuals deal with the FSA in an open and co-operative way. Where behaviour falls below our high standards we will take the necessary action to make sure customers are protected and markets properly informed."

Mr Headdon said yesterday that "a minor peripheral issue was being blown out of all proportion in order to create a scapegoat from amongst the former Equitable management".

"There has been a consistent theme of the FSA attempting to deflect criticism away from itself," he said. "That began with Sir Howard Davies's [the former chairman of the FSA] criticisms of the former management to the Treasury [select] committee in late 2001. The FSA's November 2001 press release announcing the investigation into the matter appeared to prejudge the result before the investigation had ever begun."

Mr Headdon added that he had decided to withdraw his appeal against the ban as it would have been both costly and time consuming, especially in light of forthcoming litigation against himself and other former quitable board members by the society's current management.

He said he had quit his most recent job, at Hazell Carr, the actuarial consultants, earlier this year to focus full time on the litigation, which he said now amounted almost to a "full-time job". The case is set to begin in April next year.

Mr Headdon said that having run out of insurance money, he would be representing himself in the case. He said he had no intention to seek any further work until the case was concluded, and would continue to live on the savings that he has left.

He added that even if Equitable was successful in its case to sue him, he did not have sufficient assets to pay even for their costs, and that he was unsure whether he would seek to continue in the industry in a non-regulated capacity once the case was over, or whether he would look to "do something completely different".

Earlier this year, the FSA dropped its case against Roy Ranson, another former Equitable chief executive, due to his age. Now 73, the FSA decided it was not worth pursuing a ban against Mr Ranson, given that he was unlikely to have any further involvement with the industry.

Mr Ranson was criticised heavily by Lord Penrose in his report on the society, published in March, in which he was referred to as "manipulative", "autocratic" and "aggressive" in his dealings with the regulator.