Select Committee on Treasury Appendices to the Minutes of Evidence

Appendix 8

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

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