EMAG

The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

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Correspondence: 14/01/2005 - EMAG to FOS

To all the directors of FOS
Ms Sue Slipman, Chairman
C/o Ms Barbara Cheney
Company secretary
Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London E14 9SR
Equitable Members' Action Group (EMAG)
42 Bartholomew Villas
Kentish Town
London NW5 2LL

14 January, 2005


Dear Ms Slipman,

Concern for plight of Equitable policyholders and the FOS:

EMAG was formed more than four years ago to speak up for the interests of more than one million investors in all of the various types of policy who have suffered a substantial loss of part of their pensions savings in the Equitable Life scandal. Over 10,000 policyholders have paid EMAG a subscription.

We are writing to you personally to draw your attention to the significance of the decision shortly to be taken by Walter Merricks in response to arguments by Equitable that the FOS should not consider claims against it, based on the conclusions of Lord Penrose, in the report of his inquiry. We urge you to ensure that his decision is made with the utmost care and rigour, and the FOS's reasoning is published for all to see. We stress our concern about the potential damage to the FOS that any perceived lapse in standards or transparency would do to the service on which so many rely.

The FOS was the only practical lifeline for recourse against Equitable held out by Ruth Kelly, the then financial secretary to the Treasury, as this Government's response to Lord Penrose's report. To MPs, on four different occasions, Ruth Kelly referred directly to the FOS, offering its facility and promising it the resources to do the job (see appendix).

The FSA, subsequent to Penrose's publication, granted the board of Equitable repeated waivers, such that Equitable did not need to make any formal response to new complainants until the end of October - a delay of eight months. Strictly speaking, policyholders could not make any formal application to the FOS until they had exhausted the Equitable's internal complaints procedure.

On November 15, the compliance director of Equitable wrote to the FOS, challenging comprehensively its right to consider complaints arising from the Penrose report. The FOS provides a link to that letter on its own website. In response, EMAG's wrote to Walter Merricks on 21 December with our views on why the FOS should proceed with its informal adjudication service (see our letter enclosed). For a legal response to the Equitable's challenge, we commend the submission to the FOS from retired solicitor Nicolas Bellord, available along with all relevant documents on the EMAG's website at: www.emag.org.uk

EMAG appreciates the difficult position of the FOS as regards complaints about Equitable. Thousands of Equitable late-joiners, many who applied to the FOS three or more years ago, are still waiting for a conclusion on quantum after more than 20 months since the FOS found in their favour in May 2003. We realise that this is due to the weight and complexity of legal argument and barristers' opinions that Equitable has been deploying in its defence - but justice delayed is justice denied.

Also adding to the pressure, the FOS's parent body the FSA has, by its behaviour, given the appearance of being partial. Extraordinarily, it has stated that it agrees with the Equitable that the Penrose report gives no grounds for any new generic claims, whilst it refuses to publish any substantiation for that conclusion. There is also an inherent possible conflict of interest, in that the FSA's approval of the Equitable's draconian actions in 2000/2001/2002 may have been known to be damaging to policyholders interests but judged to have been for the greater good of maintaining confidence in the industry - the FSA's primary objective.

As further evidence; of the 34 "Dispute Resolution Complaint Waivers" that the FSA has granted within the industry since becoming fully empowered (and unaccountable), HALF have been to Equitable. The tactics of the Equitable and the FSA seem to be to in unison; to delay and obfuscate, perhaps in the hope and expectation that the sense of injustice and anger will dissipate and claims will eventually be timed out.

Given that the financial secretary at the time, in response to Lord Penrose's report, invited aggrieved policyholders to make use of the FOS; given that almost 10 months have now elapsed since she did so; given that some claims may therefore have no alternative route to justice, through lapse of time or other circumstance, it would be seen as highly damaging to the FOS if any lapse of standards or transparency were perceived in the event of an acceptance of Equitable's "compelling reasons" not to consider claims based on Lord Penrose's report.

As a non-executive director of the FOS, we believe this matter is of sufficient import for you to take a personal interest and we hope very much that you will.

Yours sincerely,


Paul Braithwaite
General secretary of EMAG