It welcomes the steps being taken by the company to strengthen its capital position.
Since the company first notified the regulator of the significant divergence in its calculation of liabilities and subsequently the higher level of reserving needed against the likely cost of guarantees, both parties have worked together to address the issues raised.
The FSA will now commission a review by independent experts, under Section 166 of the Financial Services & Markets Act 2000, into the origins and implications of the divergence between the most recent calculation of the aggregate value of liabilities on outstanding policies using asset shares and earlier calculations.
The FSA will also review the impact on policyholders of the measures proposed by the company given its requirements on treating customers fairly.
It will consider further, with the industry, possible developments of the FSA's proposals for reserving against the cost of guarantees in policies by the use of modern financial risk evaluation techniques. There is a growing amount of practical experience with these techniques and it is important that the knowledge gained should be incorporated before the FSA's rules in this area are finalised.
Finally, it will monitor, in the interests of policyholders, the decisions made by Standard Life following the strategic review that it has announced.
