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: 31/07/2005 - Equitable Petition: To deny failure devalues success.

Equitable Petition: To deny failure devalues success.

To all the Irish MEPs that EMAG met on 20 April in Brussels:

On the face of it there has been some welcomed success. That springs from YOUR interest and EMAG’s Petition (29/2005).

The British government has done a U-turn, such that ALL citizens are now ranked equally and COULD benefit from any result from the Parliamentary Ombudsman’s investigation. Of course, that ignores the fact that for the last five years any overseas complainants have been dismissed out-of-hand by the UK’s FSA.

And more good news: there can be absolutely no doubt that the British government HAS changed its regulatory regime out of all recognition in the last three years - which is the clearest demonstration of how lax it was before. Britain IS now compliant with EC Laws, as the disappointingly superficial June report by the Commission into Equitable concluded. But, to sit back and regard this as a result would be to condone a very profound pan-European injustice. This is a vital matter on which MEPs CAN demonstrate the real value of the EU, in speaking up when a member state has unjustly denied European citizens.

A very British cover-up

Pensions are a very long-term investment spread over 10 – 50 years and, as is the case in Equitable, “black holes” can take more than a decade to become apparent. Achieving compliance for the future without redress is simply inadequate.

The UK Treasury itself became the regulator responsible in 1998 and quickly spotted the magnitude of the problem. The UK government IS fairly to be congratulated on cleaning up its act in the intervening years, proving that lessons can and have been learned. However, the ongoing injustice has been the failure to admit regulatory culpability (hence the heading of this Email) and the use of the time-honoured British Establishment mandarins’ tradition of knocking things into the long grass by calling for report after report. Equitable has, as the Commission points out, been the subject of many reports – and so what? The Commission FAILS to acknowledge that NOT ONE of them, including Lord Penrose’s, had any remit to address culpability or the power to trigger redress or compensation. This was NOT by chance!

Hiding behind the PO’s skirt

Further, the Commission seeks, shabbily, to hide behind the UK’s Parliamentary Ombudsman (PO) Ann Abraham. It says the investigation’s remit is very broad. NONSENSE. The PO’s office has confirmed in writing that it cannot look at ANY of the following: the Equitable Life itself, the omnipotent and unaccountable single regulator the Financial Services Authority (since November 2001), the half of the regulatory regime known as “Conduct of Business” or any aspect of EC Law.

If the British government is arguing that an ongoing PO investigation is a reason for EU institutions not to be concerned about UK compliance with EU standards, this is fundamentally flawed - because the PO’s role is not to enforce EU standards, but rather to investigate good administration, AND it cannot enforce any recommendations made as a result of an investigation.

IT IS VITAL TO UNDERSTAND THAT THE PO HAS ONLY ONE SIMPLE TASK: TO ESTABLISH WHETHER THERE WAS MALADMINISTRATION.

The government may not honour the PO’s findings

What is more, the British government has NO STATUTORY OBLIGATION to adopt the PO’s recommendations. Historically, they have always been honoured but, most disturbingly, in a very recent report presented to the UK Parliament, the Ministry of Defence rejected two of the PO’s four recommendations about compensation to Far Eastern people interned as POWs by the Japanese during WW II, which carried a cost implication of just €10m.

The BBC reported the PO, Ann Abraham, on 13 July, 2005 as saying:

“……..those owed a "debt of honour" in recognition of the suffering they endured were entitled to expect the compensation plan would have been devised and implemented properly. It is of considerable regret to me that this did not happen."

"It is also deeply disappointing that the government has not accepted that it should properly remedy the injustice I have found was caused by maladministration."

See: http://news.bbc.co.uk/2/hi/uk_news/4677729.stm

How, then, can we trust the UK government to react honourably to any possible PO compensation recommendation in January 2006 that MAY be measured in billions? The UK government is not to be trusted. It seeks at every turn to avoid payout and precedent.

The FOS Ombudsman’s door has also just been closed

Also, be aware that despite the Treasury minister responsible for presenting the Penrose Report to Parliament on 8 March 2004 saying that policyholders could, free of charge, take any new claims for compensation for mis-selling by the Equitable to the other relevant Ombudsman, the FOS - one year later that body has announced unexpectedly that it will use its discretion to NOT look at any complaints based on the evidence in Penrose! The paths to compensation have been systematically shut down and, EMAG suggests, this is a PLAN. A ruthless game of timing-out complaints has left almost every avenue now closed. The remaining cynical suggestion is: “Go to the British Courts.” But this route is only for the very rich and even then the odds are unfavourable, with investors receiving advice that to pursue, for example, losses of €35k they may be put at risk ten times that sum. We are effectively being told now that it was “caveat emptor”, but the investor was never told that at the time. Rather, we believed that a vigilant regulator was watching out for us and would, if warranted, offer redress. The evasion and denials have undermined confidence in pensions and the industry.

Britain’s laissez-faire regulatory tradition

The fact is that from the 1980s (and this pertains to Lloyds of London too) the UK regulatory regime was nigh non-existent. Notwithstanding, during those years, British financial services companies were encouraged by the UK government to sell in the new single market. In 1994 the UK signed up to arduous European undertakings that it would operate a proactive regulatory regime to protect citizens across Europe, but it did no such thing. This period has, with hindsight, been characterised as a “light touch” regime, but light-touch has absolutely no basis in either EC or UK Law.

The EC’s first and third Directives provide that remedy and redress must be provided. One million policyholders (more than 10,000 of whom are not British) have been stuffed-up with more than €5 billion in losses that the UK Treasury has for the last five years, like Lord Nelson, pretended don’t exist. But they do.

EMAG says to Irish MEPs:

“Please, keep the pressure up. Ask the Commission to look again, with a view to instigating ECJ enforcement proceedings against the UK government.”

We know that British MEPs from all leading parties WILL speak up at the Equitable hearing on Tuesday morning of 13 September in Brussels but it will be a much stronger fist in you too participate on behalf of your Irish constituents who have suffered equally. Thank you.

I attach copies of three useful background papers.

Paul Braithwaite
General secretary of EMAG Ltd
See also: www.emag.org.uk - Stop Press (rhs)

CC: FYI: Maryke Sickesz Michael Cashman and David Lowe