Letter from Melanie Johnson MP, Economic
Secretary to the Treasury to Sir Michael Spicer MP, Chairman of
the Treasury Sub-Committee
In my evidence to the Committee on 1 March I undertook
to write to you about the Government Actuary Department's (GAD)
involvement in the Financial Services Authority's (FSA) inquiry
into Equitable Life.
As you are aware, on 22 December 2000 the FSA's Board
announced that they had asked the FSA's executive management to
produce a full account of its regulation of Equitable Life for
the Board's consideration. The report will cover both the FSA's
role as prudential regulator and the Personal Investment Authority's
role as conduct of business regulator. It will cover the period
from 1 January 1999 until the Equitable's closure to new business
on 8 December 2000.
I understand from the FSA that the work of the review
will include an examination of GAD's files and interviews with
relevant GAD staff. The Insurance Directorate of GAD, comprising
about 20 people, will transfer to the FSA in April 2001. The staff
at GAD will continue to give actuarial advice to FSA on all insurance
companies, including the Equitable, up until the transfer, at
which point they will become FSA staff.
Members of the Committee were also interested in
whether Ministers were informed when the Government Actuary raised
concerns about Equitable Life in 1998. I should therefore add
that the FSA's review will include a description of the background
and events leading up to the FSA's assumption of responsibility
for the prudential regulation of Equitable Life on 1 January 1999.
20 March 2001