MPs attack Davies over Equitable Life crisis

Sir Howard Davies, the chairman of the Financial Services Authority, yesterday endured another going over by MPs for the regulator's failure to intervene effectively in the decline of Equitable Life.

In a heated exchange with members of the Treasury Select Committee, Sir Howard conceded that the regulator's own recently published report identified areas where it should have been more efficient. "As I read the report, I did frequently wish that I had acted differently. There was a failure of management, but I don't think the report concludes that we could have done anything to prevent the eventual outcome," he said.

The UK's most powerful regulator also rejected suggestions that his bonus had been reduced this year to reflect a personal failure in handling Equitable, which was forced to close to new business two years after the FSA took over the regulatory reins from the Treasury.

Sir Howard launched his most vitriolic attack to date on the former management of Equitable. He accused them of displaying "arrogant superiority" in not informing the regulator of a key decision to go to court over guaranteed annuity rates, as well as waging a campaign to resist the FSA's attempts in 1998 to get it to increase reserves.

Ruth Kelly, Economic Secretary to the Treasury, also received a grilling by the committee. She conceded that the Government might have to pay out to policyholders if two inquiries launched into Equitable called for compensation.