The man from the Pru's feet of clay : LEADING ARTICLE

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The Independent Online
The comings and goings on company boards are typically confined to the financial pages, to be mulled over by aficionados of commercial wheeling and dealing.

But anyone concerned about their old age should be worried about the sudden departure of Mick Newmarch, chief executive of Prudential Corporation until teatime on Monday.

He was the man from the Pru. He symbolised an organisation whose reputation is synonymous with dependability. As head of the UK's biggest life assurance group, Mr Newmarch played the part to perfection. The high priest of the pensions sector, he sought to occupy the moral high ground in an industry which holds people's lives in its hands.

He took to the task like a zealot. When the pensions industry fell into disrepute, Mr Newmarch was self-righteous. The Prudential, he never failed to remind us, was cleaner than clean. Frailties that had afflicted the Pru's competitors - mis-selling of pensions and exorbitant commissions - would never taint his organisation.

He went further. Prophet of future scandals, he preached repeatedly about the inadequacies of a new watchdog, the Personal Investment Authority, which was established to regulate the selling of new policies.

He condemned the authority as irredeemably compromised because it was funded and run by the industry itself. He refused to join the PIA and demanded that the Government itself should regulate his industry.

Mr Newmarch might easily have been mistaken for the people's friend in high places. How suddenly he has fallen in our estimation.

The first dent in his moral armour was made last year after he cashed in share options just before publication of documents that might have undermined the Pru's share price.

Worse damage has been done by a leaked memo from Lautro, the industry's old regulator, which has alleged significant problems with the Pru's own operations. It now seems that the Pru was neither especially bad nor especially good. But its claims to beingexemplary were overblown.

At one time the life assurance industry was trusted to give us fair treatment and offer protection in our old age. Now there is no part of it that we can completely trust to act reputably in every aspect of its dealings.

This is why we must ask the Government to be prudential. It should turn the PIA into a statutory authority to regulate the sale of all personal financial products. Ministers have resisted this move largely because they do not want to accept the costs or responsibility.

They fear the publicity that will arise from steering another complex financial services bill through parliament. Eventually, they will have to think again. Only with proper regulation can we regain confidence in an industry that is so important to everyone's security.