The Financial Services Authority has rejected allegations in the media that it forced UK insurer Standard Life to switch from equity to bonds for its with-profits fund.

The Sunday Telegraph reports that although Standard Life denies that the FSA ordered the company to sell the equities, the insurer said that a key driver for the switch into bonds was the City watchdog’s realistic solvency regime introduced in 2003.

The FSA said: We did introduce tighter solvency requirements. But at no point did we tell Standard Life to sell equities. That never happened. How the company met those requirements was entirely its own business.

We were never, never ordered by them [the FSA] to sell equities, the Standard Life told the newspaper. But the new solvency regulations created a situation where we had to rebalance our portfolio. The FSA’s regulations were a key driver for that change, the fund manager added.

The mutual has been criticized for its handling of investments after revealing recently that it was cutting bonuses on some of its policies for the seventh time in four years. Four years ago, nearly 80% of the with-profits fund was invested in equities, but the company switched over to bonds instead in 2004 and the level has now fallen to 31%. Some critics argue that investors may have been better off if the insurer had stuck with the equities.