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Yes, say the life companies citing a statement made in 1998 by Patricia Hewitt, the then Economic Secretary to the Treasury.

She made clear that it was acceptable to meet the pensions mis-selling costs from the inherited estate, because it is "a sensible way to protect policyholders from immediate and severe cuts in their bonuses".

But the FSA has had an attack of conscience. It has published a Consultation Paper for an amendment to the Conduct of Business Rules (COBs) governing the treatment of funds that may be used for payment of compensation to victims of mis-selling.

The document proposes that insurance companies will no longer be permitted to charge compensation for mis-selling to the inherited estates of proprietary offices’ with profits funds.

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