Correspondence: 24/09/2001 - to Mr Vanni Treves Open letter to Vanni Treves
from EMAG former chair Vincent Nolan
Date: Mon, 24 Sep 2001
Dear Vanni
As the person who instigated the dialogue between ELAS and the Action Groups about
the Compromise (a dialogue which appears to have been fruitful eventually) I would
like to bring my comments to your personal attention (given that you cannot possibly
read the thousands of messages you are no doubt receiving).
While there is much to admire in the Compromise proposal and the way it has been
presented, I have submitted the following to the Comments Line:
- I am very disappointed
to see that the meeting is scheduled to finish at 3.30 p.m. It is ridiculous
to bring 300 people to London for a mere 90 minutes discussion. At the AGM,
the arbitrary finishing time and the unsatisfactory handling of the questions
(people allowed to ask multiple questions, make speeches, ask questions that
had already been answered) meant that only one-third of those who had registered
questions were able to put them before the meeting closed. I suggest this
meeting be extended to 5.00 p.m. and questions be restricted to one per member.
The restricted time prompts me to wonder whether this a genuine consultation
or merely a PR gesture? Is the Proposed compromise open to amendment, or is
it already 'set in stone'?
- While it is good to
see the legitimate grievances of the non-GAR policyholders acknowledged, there
needs to be special consideration for those who took out policies recently
(from Jan 98 onwards). Long-standing policyholders, both GAR and non-GAR,
have had the benefit of many years' bonuses which we now know to have been
excessive. But those who joined in 1998 or later will have had the benefit
of only one or two such years, plus all the pain of subsequent events. They
have the strongest case for unfair selling because the Society had already
been warned by the Government Actuary that the reserves were inadequate. I
suggest that the MVA should be waived for people in this situation - a promise
to do this might secure more votes for the compromise and certainly would
reduce the negative votes. 2.5% for these people is quite inadequate
- The final paragraph
on p.9 of the Background document is factually incorrect and should be corrected.
It states:
"At the time when the agreeement with the Halifax was concluded, issues concerning
the non-disclosure of the GAR costs to the non-GAR policyholders were not
considered by the the parties as the Society had not yet been advised of the
issue. (My italics)"
The Society was advised of the issue, forcibly, at a meeting which I attended
in the Equitable Boardroom in Basinghall street on Dec. 1st., 2000, by Jeremy
Lever QC and Adrian Howard-Jones of the Equitable Members Action Group. It
was their representations that led to the appointment of Nicholas Warren QC
to investigate this and other issues. The Society was represented by Alan
Nash, Chris Headdon, Jennie Page, Peter Wilmot and Alistair Dunbar. There
is no excuse for the inclusion of such an inaccurate statement in such an
important document - it reflects on the credibility of the document as a whole.
- What is the relationship
between the Compromise proposal and the Rectification Scheme? My With Profits
pension is derived from a GAR policy and I was promised a Rectification offer
a year ago. Will I know what the offer is before the final vote on the compromise?
It will certainly affect the way I vote - if I feel the rectification offer
is fair, I will be more likely to vote for the Compromise.
Overhanging the whole exercise is the issue of full disclosure of the Society's
financial situation. I can see no possible justification for the refusal to
publish the Financial Review which triggered the July 16th reductions in policy
values - 'commercial confidentiality' is irrelevant in a closed mutual. For
the Compromise vote we are promised only accounts to June 30th., which will
tell us nothing about events since the July 16th measures and the Stock Market
collapse. The Society's refusal to come clean simply generates the suspicion
that management is hiding some more unpleasant facts and members try to guess
what they might be - hence some of the wilder speculation. Being 'economical
with the truth' is a much admired skill in our ruling classes, but in this
situation the Board need the trust of members and 'honesty is the best policy'.
I trust you will find my comments
constructive, even though you may well find them unwelcome.
Yours sincerely
Vincent Nolan
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