Recent Press Coverage - 18 June '07

Ian Cowie, Personal Finance Editor
In the Saturday Telegraph 16th June 2007

Euro hopes on Equitable

Equitable Life's policyholders have suffered many disappointments since this over-promised fund pulled down the shutters seven years ago.

British Governments of both the main parties failed to spot what was going wrong on their watch, despite many warnings about trouble ahead, published here and elsewhere.

Next Tuesday the EU Parliament will vote on its own inquiry into this scandal. Let's hope they come to a conclusion that helps to restore savers' confidence and - unlike the decision to ignore earlier EU criticism of the failure to protect company pensioners - our Government pays attention.

Without wishing to put too fine a point on it, when it comes to older people's life savings, justice delayed really can be justice denied.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/16/cmian16.xml

Victims of Equitable Life scandal await result of Strasbourg debate

TERESA HUNTER in Scotland on Sunday 17th June 2007

THE British government will be called upon to pay full compensation to victims of the Equitable Life collapse when the scandal is debated before a full gathering in Strasbourg of the European parliament on Tuesday, writes Teresa Hunter.

This follows a year-long investigation by members of the parliament spearheaded by Yorkshire & Humber MEP Diana Wallis, which concluded that the UK government had failed to comply with EU legislation requiring it to safeguard investments. This follows pressure from the Equitable Members Action Group, which first petitioned the European parliament for an investigation more than a year ago.

The existence of some 20,000 non-UK EU investors who had lost money when Equitable collapsed persuaded the European parliamentarians that they should examine the events leading up to the debacle which destroyed what was once Britain's finest insurance company.

Emag spokesman Paul Braithwaite said: "The Equitable debacle has rumbled on unresolved for more than six years, it was clear we were going to get the runaround from the British government and establishment which wanted to bury the whole matter.

"With the Treasury finding more and more ways to keep it in deep field we had no choice if we wanted justice. We believed we had to take our case to Europe."

The report of the investigating committee will now be placed for endorsement before all members of the parliament.

It found that there had been a regulatory failure and that in the absence of any other real possibility of redress for the victims, "the UK government is under an obligation to assume responsibility". It therefore recommends that the UK government devise and implement an appropriate scheme with a view to compensating Equitable Life policyholders within the UK, Ireland, Germany and elsewhere.

The EU has no power to force the UK government to pay compensation. However, overwhelming support for the victims in Tuesday's debate would prove hugely embarrassing.

The investigating committee urges the UK government to implement recommendations by the UK Parliamentary Ombudsman. However, the report due this month has been delayed due to the weight of defence material which the government has handed to the Ombudsman's office.

Equitable Life collapsed after selling generous guaranteed pensions in the 1980s and 1990s which it could not afford to meet. More than a million investors saw their pensions cut as a result.

http://business.scotsman.com/finance.cfm?id=945712007

Hope for victims of Equitable Life

Daily Telegraph, by Philip Aldrick
16/06/2007

Hope for victims of Equitable Life
Liberal MEP DianaWallis

Victims of Equitable Life's collapse have been given renewed hope of compensation after a European inquiry found the British Government guilty of failing to implement EU directives that might have protected policyholders.

A European Parliament report into the collapse, to be debated on Tuesday, recommends the Government "set up a compensation scheme for victims" after deciding it "bears a great deal of responsibility" and "clearly did not keep to the spirit of the [EU financial services] directive", committee chairman Diana Wallis said yesterday.

Ms Wallis, Liberal Democrat MEP for Yorkshire & Humber, conceded that "compensation is not a matter for us". But she said the inquiry's findings would strengthen the victims' case - for as much as £4bn - alongside what is expected to be a critical report by the UK Parliamentary Ombudsman, Ann Abraham.

Ms Abraham's report is due later this year and is expected to rebuke the Financial Services Authority for failing properly to monitor Equitable, which was plunged into difficulties after losing a legal battle in the House of Lords, leaving it with a £1.5bn liability.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/16/cnequitlife.xml

EU blames UK regulators for Equitable Life crisis

IFA Online, by Katrina Baugh
Friday 15th June 2007: 15:00

The European Parliament's committee of inquiry into the Equitable Life crisis has slammed UK regulators, including the FSA and the Government, for not moving fast enough to prevent the company's collapse.

The committee says the UK's light touch regulation policy and its deference to Equitable Life's reputation allowed the problems at the company to go unchecked.

MEP Diana Wallis, who will lead a full European Parliament debate on the inquiry's report into Equitable Life next week, says: " We want to see a strengthening of the UK regulatory regime so there is more early warning. If the regulator forsees a problem they are in a position to act more swiftly and will be able to look much more carefully at what is going on."

"Since the crisis occurred much has improved but we cannot afford to become complacent."

She stressed the inquiry was not suggesting a move to over-regulation but that regulators across Europe could no longer take a passive stance.

The EU's inquiry also goes some way to contradicting the conclusions drawn in the Penrose Report into Equitable Life in 2004 which blamed the company rather then regulators for the crisis.

On the matter of compensation for the 1.5m policyholders affected, mainly in the UK, the committe found the Financial Ombudsman Service (FOS) did not offer an appropriate means of redress. It advised that the capacity of the FOS should be improved as well as work done to reassure people it is an independent body.

Although the Committee cannot order the establishment of a compensation scheme, it can put pressure on the UK Government to set up a scheme on the grounds it failed to fully implement the EU Third Life Directive.

The committee hopes its own damning report coupled with the Parliamentary Ombudsman's report into the crisis, due at the end of the year, could lead to the establishment of a Government-funded compensation scheme for policyholders.

In the event of future situations similar to that of Equitable Life, the committe suggests a Europe-wide collective scheme could be set up to insure all policyholders get their correct share of compensation.

Wallis also says the inquiry will have far reaching implications for the legislation of the whole European financial services industry, including the Commission taking a proactive approach to ensure EU law is properly implemented.

" This is the first time in ten years there has been an EU temporary committee of inquiry set up to look into an issue which shows its level of importance. The last time was in 1997 for Mad Cow disease which prompted the reorganisation of our agricultural policy," Wallis says.

The inquiry, which has taken 18 months to complete, was prompted by petitions from policyholders. The full European Parliament is expected to support the findings of the inquiry in a vote on 19 June.

The final report can be found at http://www.eurpoparl.europa.eu/comparl/tempcom/equi/report_en.pdf

http://www.ifaonline.co.uk/public/showPage.html?page=ifa2006_articleimport&tempPageName=453649