The British Financial Services Authority (FSA) is seeking independent legal advice on whether Equitable Life members who did not have guaranteed annuity policies were victims of mis-selling.

This move by the City watchdog could affect other pension companies that are reeling from the cost to the industry of honouring guaranteed annuity liabilities, estimated at up to £10 billion sterling (€16 billion).

The FSA announced in February that it was examining whether Equitable policyholders who bought policies last year could claim they had been mis-sold.

This applies in particular to those who bought policies after the Law Lords ruled in July against the mutual's stance on guaranteed annuities. Equitable Life has 15,000 Irish policyholders.

Depending on its legal advice, the FSA's review could affect other pension groups. If the regulator decides these policyholders were misled and suffered a loss, they could be eligible for compensation.