Angry investors who lost out when insurance company Equitable Life collapsed seven years ago yesterday demanded the financial regulator be stripped of its consumer protection role.

At the Financial Services Authority's annual public meeting, chairman Callum McCarthy faced repeated calls to give the regulator's response to a damning 2800-page report by the Parliamentary Ombudsman Ann Abraham which was published last week.

Paul Braithwaite, of the Equitable Life Members' Action Group, criticised the FSA for not addressing the issue.

"The FSA has been found guilty by the ombudsman on no less than five major counts of maladministration."

He added: "The FSA should be stripped of its consumer protection role."

The FSA chairman said that unspecified "legal reasons" meant he could not comment on the report until after the government, which was also found guilty of maladministration, had itself responded to the findings.

Officials at the ombudsman's office said the crucial failure had come in May, 1999, when the FSA permitted a financial re-insurance arrangement at Equitable Life, reputed to be worth £809m, was found to be worthless.

Full compensation would cost the government around £4.6bn for the estimated one million policies held with the mutual society.

Andrew Whittaker, the financial watchdog's general counsel, said yesterday: "It is up to the government to respond to it. It would be wrong for us to respond to it in advance of them saying so."