It is also possible the retirement age could be raised to 70

It is also possible the retirement age could be raised to 70.”By contracting out, you know you are in control of your pension money and you decide the level of investment risk you want to take with your pension pot.”. Fresh despair for Equitable Life policyholders has fuelled accusations of a fundamental flaw in the constitution of the financial watchdog. Last week’s decision by Parliamentary Ombudsman Ann Abraham to clear the Financial Services Authority (FSA) of any failure to properly regulate Equitable, the mutual that slashed its members’ pensions, threatens to taint the legacy of Sir Howard Davies, its soon-to-depart chairman. In particular, Ms Abraham warned of a mismatch between public expectations of the regulator and what it could actually achieve. Complete protection for all policyholders was “never envisaged” by the regulator’s founders, she said.Sir Howard’s organisation now faces grave accusations from the Consumers’ Association (CA) concerning two of its objectives – maintaining confidence in the markets while protecting consumers – enshrined in the Financial Services and Markets Act 2000. The CA says these are incompatible, and that the conflict of interest prevents the regulator from doing its job properly.The ombudsman’s decision on Equitable destroyed pensioners’ hopes of government compensation and provoked a warning from the CA that financial regulation in this country was now “in serious question”.In the case of Equitable, the FSA made sure that the struggling insurer did not collapse and threaten the financial services industry. But consumers suffered as a direct result, according to Mick Mc-Ateer, the CA’s senior policy adviser.”The objective of promoting confidence in the financial markets has overrun that of protecting consumers,” he says.

“It raises very serious questions when a company in trouble is allowed to continue by the regulator -which is exactly what has happened.”Sir Howard has already fought off criticism of his tenure as the regulator’s first chairman. His watch included the collapse of Independent Insurance, the split capital investment trusts scandal, the Equitable debacle and the report by Ronnie Baird, the FSA’s internal auditor, that criticised the watchdog’s methods.In its first review of the FSA, scheduled for November, the Treasury is set to analyse the structure of the organisation to determine whether fundamental changes need to be made.Kate Burns, a spokeswoman for the watchdog, says every consumer benefits from confidence in financial markets, but concedes that a balance has to be found between the FSA’s twin objectives.Even if the organisation were restructured to separate out its responsibilities, it would struggle with the same tensions, she claims. “Would it be any easier if on one side you had consumer protection, and on the other you had maintenance of market confidence?”Colin Brown is chairman of the Financial Services Consumer Panel, a consumer advice body for the regulator. He is delving as far back as the 1950s to investigate Equitable and its investment processes.The Equitable pensioners’ troubles began after the insurer lost a legal battle in the House of Lords in 2000 over the rights of guaranteed annuity rate (GAR) policyholders, leaving it with a billion-pound pensions liability. After much wrangling, members then agreed on compromise schemes that gave GAR policyholders an increase of some 17.5 per cent for giving up their rights, and non-GAR policyholders 2.5 per cent for accepting the GAR increase and agreeing not to sue the insurer.But in test cases last month, the Financial Ombudsman Service ruled that Equitable mis-sold policies to people joining after 1998; it is estimated that some 70,000 policyholders have been victims of mis-selling.Similar scandals have afflicted swathes of the UK financial services industry, from personal pensions to endowment mortgages and split cap trusts.Now, after three years of falling stock markets, both the Government and consumer bodies like the CA want the public’s faith in the financial markets to be restored. But the ombudsman’s verdict on Equitable is unlikely to have helped, says Mr McAteer at the CA: “If [the Government] thinks that people will invest in financial products after this decision, it’s almost ironic.

The decision was a bombshell – it couldn’t have come at a worse time. If the FSA cannot protect consumers, then who can?” .uk. The Financial Services Authority’s escape from censure over regulatory failure at Equitable Life left policyholders out in the cold. And last week’s decision on Equitable will have done nothing to change savers’ minds.We need renewed faith that making a decision to save isn’t likely to leave us short-changed – and that demands a regulator that inspires confidence.The Treasury’s review of the FSA is an opportunity to examine forensically how it could be improved The chance must be taken.Melanie Bien is away. A massive expansion of motorways is to be announced this week by Alistair Darling, the Transport Secretary, in an attempt to beat the gridlock on Britain’s roads. Lorries will begin paying road charges from 2006-07, a Whitehall source said.Friends of the Earth said yesterday that the road widening schemes were “misconceived” and would only lead to more traffic. “Yet again the Government has forgotten you cannot build your way out of Britain’s transport crisis.

More roads mean more cars, more pollution and more congestion,” said Tony Juniper, director of Friends of the Earth.Mr Darling’s announcement follows the completion of 11 “multi-modal” studies into road expansion schemes which he has now ruled on. The Secretary of State plans to accept many of its recommendations, including widening the entire M25 to eight lanes – except over a bridge across the Thames – at an estimated cost of £1.7bn. He acknowledged today that consideration had to be given to new ways of managing road usage. Interviewed on the BBC Radio 4 Today programme, he said: “If you look at the pressures we face over the next 20 to 30 years, then we have to consider how best to manage future demand and I have said that road pricing, which we are introducing for lorries from 2006, is one of the things that we need to look at.