20 December '02 - Email from Hugh Burns, Secretary to the Penrose Inquiry

Subject: RE: Concern about Vanni Treves' statement:
Date: Fri, 20 Dec 2002 12:37:48 -0000

Dear Mr Braithwaite,

Thank you for your e-mail of 19 December. I am not sure that we can set out the position any more clearly than we already have.

Lord Penrose is leading an inquisitorial inquiry. He is not presiding over a court of law. His objective is to make firm findings of fact about the events leading to the problems at Equitable Life, to provide a robust and authoritative account of their causes, to draw lessons and to make recommendations. He cannot say in advance what those findings are likely to be, what lessons he will draw, or what recommendations he will make. He has made clear that he will not shrink from making adverse comment about the conduct of individuals or institutions. Thus it is entirely possible that he will arrive at findings that are critical of specific parties.

That is quite different from determining breach of a legal duty or liability for any resulting loss, which could only be done by a court of law, following all the necessary adversarial processes and making a full assessment of damage for each claimant.

Although it is not for me to answer for either of them, it is not clear to me that either Mr Treves or the Parliamentary Ombudsman is in any doubtabout the extent of Lord Penrose's remit. Mr Treves seems to be saying thatthe Inquiry has access to a lot of material to which the Society do not have access and that the Equitable board propose to assess the grounds for further legal action in light of Lord Penrose's findings. Similarly the Ombudsman has drawn attention to the fact that this Inquiry is looking at events and issues that fall outside her own jurisdiction.

All along it has been Lord Penrose's clear view that in order to understand and judge the conduct of the regulators it is necessary also to understand exactly what was going on at Equitable, the role played by the auditors, and the position adopted by the relevant professional bodies at material times. That is what this Inquiry has set out to do. Although the time taken is clearly a source of frustration to the many policyholders and former policyholders who find themselves in actual or impending financial distress, this work is important and needs to be done thoroughly. Judgements hastily arrived at will not serve the best interests of the past and present policyholders of Equitable and the future customers of the life and pensions industry, all of whom are important stakeholders in this Inquiry.

As ever, you are also welcome to publish my reply on your website
and/or to distribute it to your members.

Yours sincerely,

Hugh Burns
Secretary to the Inquiry