Watchdog topples fund bosses

THE top two directors at life assurer Eurolife have been forced to step down after the Financial Services Authority ruled they had put customers' cash at risk.

The City watchdog, claiming victory after a two-year probe, said it had ordered Eurolife to close to new business and to put its assets into an independent trust until managing director David Wootton and chairman Lynne Green were replaced.

Eurolife used funds raised from bond issues to plug shortfalls in property-linked funds run by a subsidiary in Gibraltar, FSA said.

Eurolife was not immediately available for comment but the watchdog said it had disputed the claims throughout the investigation. It has not fined the company nor the directors, and said Eurolife remained solvent.

'This action demonstrates very clearly that the FSA will hold senior management of regulated firms personally accountable for the way they run their businesses,' said FSA managing director Carol Sergeant.

The action may go some way to improve the FSA's track record on regulating the insurance sector, a market it inherited in 1999. It has been slammed for not acting quickly when Equitable Life closed to new business in 2000, leaving a million policyholders out of pocket.

Wootton has agreed not to seek a senior role in the UK financial services industry. Green will remain as a Eurolife director but has undertaken not to take on a chief executive role in any firm authorised by the FSA for three years.