The annual meeting of the FSA 15 July, 2004

The FSA seemed to have borrowed ELAS's fancy purple set, big screen, teleprompters etc.

Callum McCarthy cut a rather unsure but genial figure as the new chairman. Rather extraordinarily, each of the five set piece speeches, largely lifted wholesale from the respective recent annual reviews, were greeted with stony silence and no applause.
Even more surprising was that I managed to ask the first two questions.

I challenged the FSA, in the wake of yesterday's writ from 700, to publish as a matter of urgency substantiation for its provocative new assertion that Penrose gives no grounds for group actions. I suggested it was owed to policyholders for the credibility and transparency of the FSA.

I received an unsatisfactory answer (and I told him why afterwards) from the new managing director of Retail Markets (Clive Briault). He said that unfortunately a great deal of what they had evaluated had been supplied on a confidential basis by ELAS (presumably from counsel/s opinion/s and Herbert Smith) and as such the FSA isn't at liberty to disclose. I alluded to the Glick and Snowden QC's opinion published in Sept 2001 and said policyholders were owed similar independent substantiation - given the common sense weight of evidence for group claims evident from Penrose.

My second question was about what will the FSA do proactively to safeguard the interests of policyholders like those in ELAS who have £160bn invested in CLOSED WP funds - which no longer do what it says on the tin.

I pointed out that there are no controls from market forces in closed funds and that, in the main, the investments aren't any longer in equities, have very poor bonus prospects, high admin costs, punishing MVAs and are accountable to no-one. Further, that offers from vulture funds' were rumoured to be being viewed by Financial Service Company vendors ONLY from the viewpoint of short term capital maximisation with NO regard for policyholders long term prospects.

The FSA is aware of the problem and looking at it!

Paul Braithwaite
15th July, 2004