Correspondence: 05/05/2004 - Alex Henney to Vanni Treves
05 May '04 - EMAG to Vanni Treves
5th May, 2004.
Mr. Vanni Treves
C/o Equitable Life
55 Basinghall Street
London EC2.
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38 Swains Lane
London N6 6QR.
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Dear Mr. Treves,
I hope that you and the Board are pleased that EMAG was successful in obtaining permission to proceed with its application for judicial review against the Parliamentary Ombudsman on two points of law - that she should consider that the conduct of GAD is within her remit, and should not have proceeded on the basis that the philosophy of regulation was based on a "light touch". Thus, through our legal and political endeavours we have played a major role in:-
- Her agreeing to consider reopening her investigation after Penrose. In our initial pleading last September we pointed out that in her original refusal she was illegally fettering her discretion. Shortly thereafter she agreed to consider revisiting her investigation in the light of Penrose
- Securing a reasonable prospect of getting the GAD included in any future investigation. You may be interested to know that shortly before the hearing her solicitor advised us that if she asked for it, the Government had indicated that it would consider introducing a statutory instrument to include GAD retrospectively within her purview. We suspect that this was a consequence of both our legal proceeding and also of Andrew Tyrie's and Dr Tony Wright's political pressure
- With the criticism of the judge in her ears regarding applying greater rigour, and the threat of a JR hanging over her head, we have brought great pressure to bear on her both to undertake a further review and to do it properly
While the Board was "waiting for Penrose", we took these actions on behalf of policyholders, both past and present.
I had supposed that we had a common interest with the Board in pursuing compensation from the Government. As I indicated in my letter dated 25 March we had hoped to discuss our action against the PO along with other legal issues on which we have been working. Unfortunately you declined to agree to a meeting, making claims that EMAG's actions were destabilising the Society and costly. Your letter of 6 April indicated that your claims were mere assertion, and had no foundation.
If we had had that meeting, we might have avoided the situation where the Board has recommended to policyholders that they not support EMAG pursuing the Government and making that recommendation on a basis that does not accord with the facts.
First, EMAG is not promoting "groups and lawyers proposing to sue the Society". Mr. McGarahan wrote to me that the basis of this assertion was that we had links on our website to such groups and lawyers. The links on our website include the FSA, the FOS, Equitable, EPHAG and others (including ELTA and ELCAG). They are all there as part of our objective of providing information. (The Equitable Life Members' Help Group similarly provides links to both ELTA and ELCAG). The legal link includes a reference to Clarke Willmott under the heading "A suggestion for those seeking Legal Advice in Connection with Equitable Life". We mention that they provided EMAG with helpful advice on the GAR rectification scheme, and state: "This is neither advice nor a recommendation from EMAG". The Oxford dictionary defines "promote" as "support or actively encourage". EMAG has done neither.
Second, the Board is also in error in suggesting that the purposes for which the grant is requested by EMAG are unclear and that EMAG's expenditure would duplicate expenditure by the Society. EMAG's objectives in this regard are:-
- To persuade the Parliamentary Ombudsman that there has been maladministration such as should lead to the payment by the Government of compensation (an area in which to date only EMAG, rather that the Society, has made any progress). Part of the money would go to pursuing the application for judicial review. Since the Society has stated that the PO is central to its strategy, and Herbert Smith has clearly pointed out the importance of her including GAD in her deliberations, the Society should, I would have thought, clearly support this aim. Furthermore by copy of this letter, we ask that the Society make a significant - or better complete - ex-gratia payment towards the costs we have already incurred (about £85,000), which will strengthen our finances for going forward
- To get the European Commission to take up with the British Government the issue of breaches by the United Kingdom of the 3rd Directive (a point which the Society's lawyers have recognised can usefully be taken, if at all, only by policyholders and not by the Society. This approach is entirely separate from the making of legal claims against the regulators, which the Society's lawyers state to be unrealistic)
- To investigate the possibility of bringing a Francovich case on behalf of present and past policyholders
- To promote a petition from a number of member states
We note that the Board states that the implementation of EMAG's resolution would be outside the powers of the Society. If the Board has received legal advice to that effect, may we please be supplied with a copy of that advice so that we can consider how the wishes of the membership of the Society through EMAG could best be helped.
I hope that, having considered this letter, you will agree that the Board's stated position with regard to EMAG's proposal is not appropriate and mislead members; that you will withdraw the objections to EMAG's resolution and forthwith change your website; and that we can now, without mutual recrimination, constructively proceed to a way forward.
Certainly, if policyholders perceive that the Board is unwilling either to take up the cudgels itself or to support, at a cost that is modest relative to the sums expended by the Board on outside advisers, effort by EMAG to recover, on behalf of past and present policyholders, compensation from the Government, then I have little doubt that more current and former policyholders will follow Ruth Kelly's advice. Namely more will join ELTA and ELCAG and further groups will form to sue the Society or create "class action" complaints to the FOS. Notwithstanding the brave words in the Annual Report & Accounts and in the recently published "Principles and practices of financial management", I am sure that the Board is more than aware of the risks that Penrose's analysis poses. Such action might really destabilise the Society, and if that happened it would not be in the interests of the current policyholders. And it would be a consequence of the Board's reluctance to be seen either to take action on their behalf, or to support EMAG.
Yours sincerely,
ALEX HENNEY
Chairman of EMAG
cc Board Members
EMAG Committee
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