27 November ’02 - Report on the Adjournment Debate in Parliament

This is the sixth time I've attended parliamentary debates (including TreasCom) on matters Equitable. I am surprised and perhaps inappropriately pleased to say that I have been consistently impressed with opposition MPs' grasp of what we must admit is a complex situation. But, of course, it’s only words and the fact is that the Treasury is calling the shots.

There was a full 90 minute debate with contributions from 12 MPs.

Dr Vincent Cable did policyholders proud by dedicating his won-in-the-ballot opportunity to Equitable. He spoke well for 20 minutes. Cable started by emphasising the anxiety caused by uncertainty over solvency resulting from the ongoing real risks hanging over the W P fund. He finished by reading today’s Daily Mail’s editorial by Tony Hazell.. This lifted my colleague Alex Henney's quote: "Not me guv" and described it as the disposition of both Government and regulators. It ends:

"Equitable’s policyholders are victims of mismanagement, lies, mis-selling, misinformation, financial manipulation and downright incompetence. It’s time the Government and the FSA organised a rescue."

Cable called on the Treasury to become proactive; to call for an interim report from Lord Penrose and to launch a lifeboat, for the sake of the credibility of the pensions industry whose reputation has been considerably damaged.

He cited the precedent of an industry-wide bail-out through purchase 15 years ago of Ayala (?) and suggested that the Government has a responsibility to orchestrate such an industry scheme and not wait until there’s a need to invoke the Financial Services Compensation Scheme.

His final point was to remind the Parliamentary Ombudsman that they have 258 referrals sitting unaddressed, many of which are concerned with maladminstration pre 1999. He believes that progressing those complaints should NOT be delayed, since Penrose’s report may yet be another year. BRAVO Vincent!

Mark Field, Tory for Westminster (and Sir Gordon Downey’s MP) made a good short speech. He lambasted the Government for washing its hands of the trapped annuitants. He acknowledged that many of his constituents are worried sick and suggested that the matter should now be beyond politics – invoking national interest and the damage being done to the reputation of financial institutions. He reminded MPs that the regulator is not meant to be a "face-saver".

I'm pleased to report that the new Tory front-bench spokesman: Stephen. O'Brien, Tory for Eddisbury proved to be a star!

He was extremely articulate. He started well by paying tribute to the action groups and "E 7", who he said were always serious and compelling in their fight for justice!

He highlighted the lack of any leadership. Then he pointed out that, whilst Baird had been highly critical of the FSA’s performance, the report
acknowledged that most of the damage was done pre-FSA (i.e. pre 1999).

He then made the very incisive point that Penrose reports to the Treasury wheras the remit of the office of the Parliamentary Ombudsman is to report to MPs in Parliament.

The PO's role is to pinpoint responsibility for maladministration and it is empowered to co-opt and to publish.

Very effectively, he contrasted precisely this FOCUS of P O on blame in maladministration, with the vague, all-encompassing remit of Penrose and its voluntary platform - with reporting, in the first instance in private, to the Treasury. Touche!

He attacked explicitly the DTI and Treasury for continuing to let the Society sell policies up to and during 1998, having been negligent in allowing this whilst Equitable had inadequate reserves – yet this period is not yet being investigated by the P O.

He suggested that TreasCom has the opportunity to help and he urged them to reopen their investigation. John McFall, TreasCom chairman, arrived hastily (by pager?) to assert that his committee has already decided to write to the Treasury, FSA, Penrose and the Society to
assess the situation and when the answers are back it may decide to take matters forward! Ho hum. An unsatisfactory response from a labour MP who, thus far, seems to be a Treasury toadie.

Last up was the minister for the Treasury, Ruth Kelly (MP for Bolton West). What a dismal, lacklustre mumbling performance!

Just the same platitudes that have been trotted out before. Lord Penrose IS independent. Blah, blah blah. WHERE WAS THE MEAT?

She wasted her meagre 12 minutes wittering on, detailing the history of the selling of GARs and about how well this Government had done by giving us a SINGLE regulatory authority. She Filbustered by reading from her vague "learn lessons for the industry" remit of Lord Penrose.

Kelly reiterated the mantra that there is the presumption that the report will be published in full, but again placed heavy emphasis on the codicil that it cannot, however, break laws of confidentiality (which, no doubt, pertain to all Government departments’ internal papers). Weasel words.

She implied that there is already ample protection from the FSCS, because it cover 100% of the first £2,000 and 90% of policy value – though she omitted the fact that the 90% is applied only to the guaranteed element of fund values. Whether the industry has either the will or the wherewithal remains in doubt.

I noted, with a hollow laugh, that Kelly emphasised that: "The FSA is working EXTREMELY closely with Equitable’s management…." Perhaps more accurately, they are actually taking the decisions and pulling the puppet management’s strings? She seemed to visibly sigh with relief that she was timed out

All we learned today was that the Treasury is NOT minded to "impose an artificial deadline" on when Penrose must report. The Treasury is "toughing it out" and continuing to ignore ELAS policyholders - despite the fetid smell. When will the Treasury realise that it will be cheaper to address the injustice of Equitable than allow it to continue to rot at the heart of the near moribund pensions industry?

Paul Braithwaite
27th November, 2002
PS: The verbatim transcript will be published in Hansard on Nov 28th.