Jessica Bown in the Sunday Times June 25, 2006

Equitable Life policyholders who lost out when the insurer almost collapsed in 2000 were dealt another blow last week when the European parliament committee investigating the scandal said it needed more time. Hundreds of thousands of Equitable Life members watched in horror as their life savings evaporated before their eyes during the mutual’s struggle to remain solvent after a House of Lords verdict in 2000.

Many are pinning their hopes on the European parliament deciding that regulation at the time was inadequate — strengthening their case for compensation from the British government.

Paul Braithwaite of the Equitable Members Action Group said:

“We lodged the petition that resulted in the report in 2004, and have attended every session so far.”

News that the committee, which was scheduled to publish its findings in February 2007, wants more time to gather evidence will therefore disappoint those hoping for an early settlement.

However, Braithwaite said: “The committee wants to have enough time to study the findings of the Parliamentary Ombudsman, Ann Abraham, which is something we have encouraged and continue to support.”

Abraham reopened her investigation into the debacle when a 2004 paper by Lord Penrose found that regulatory shortcomings had been partly to blame, along with poor management.

Her report is expected this year.

http://business.timesonline.co.uk/article/0,,9556-2241516,00.html

BBC Thursday, 22 June 2006
EU Equitable inquiry faces delay

A committee of the European Parliament investigating the Equitable Life scandal wants longer to finish the job.

The investigation was to be completed by February 2007 but the committee wants more time to gather evidence.

This will come as a blow to Equitable members who had hoped the investigation would strengthen their case for compensation from the UK government.

Equitable Life came close to collapse in 2000 when it could not honour pension pledges to some policyholders.

The life savings of many Equitable members were reduced sharply as the mutual insurer struggled to remain solvent.

Groups representing Equitable members have long claimed that government regulation of Equitable Life was inadequate and allowed the financial crisis to develop.

Time extension

In February a special committee of 22 MEPs was set up to investigate the government's role in the scandal.

The committee was asked to examine "allegations that UK regulators consistently failed to protect policy holders by rigorous supervision of accounting and provisioning practices and of the financial situation of Equitable Life" .

The committee was asked to finish the job within a year.

But according to Liberal Democrat MEP Diana Wallis, a member of the investigating committee, more time will be needed to gather evidence and come to conclusions.

The request for more time will be contained in the committee's interim report to be published in July, Ms Wallis said. Ms Wallis is the author of the interim report.

It is unclear, at this stage, how much extra time will be needed.

The committee has no power to order compensation - just to propose a tightening of EU law.

Previous investigations

The European Parliament's investigation is the latest in a long line of inquiries into the Equitable scandal.

In 2004 Lord Penrose published an extensive report into history of Equitable Life.

The report pinned most of the blame for the near-collapse of the world's oldest mutual insurer on the management team, accusing it of "dubious" practices and nurturing a "culture of manipulation and concealment".

But the government did not escape censure, with Lord Penrose pointing to regulatory failings.

Following the publication of the Penrose report, Ann Abrahams, the Parliamentary Ombudsman, announced that she would reopen her investigation into the scandal.

The Ombudsman's report will be out later this year. Ultimately, the Ombudsman could order the government to compensate Equitable Life's policyholders.

http://news.bbc.co.uk/1/hi/business/5105236.stm

Equitable Life pensioners press MEPs for EU action

By Lorraine Mallinder, in European Voice 19th June, 2006

The European Parliament's committee investigating the collapse of the Equitable Life Assurance Society reconvenes next week (21 June) to hear further evidence on a case which could lead to EU-wide legislative changes on cross-border consumer protection.

In 2000, Equitable Life nearly collapsed after revealing it was unable to meet guaranteed annuities on policies spread across the EU. A million policyholders, mainly in the UK, with some 15,000 in Ireland and Germany, having seen the value of their retirement savings and investments slashed when the society came to the brink of collapse, are now seeking redress.

UK Liberal (ALDE) MEP Diana Wallis, who is reporting Parliament's opinion on the case, said: "The reason we're looking into this is because it is a European story. It's a good example of where EU legislation has not been satisfactory. How do we get redress cross-border if we go down a country-of-origin path?"

The Parliamentary committee, set up in January after more than 200 MEPs signed a petition calling for an investigation, is looking at the application of relevant EU legislation in the UK, possible shortcomings in the European Commission's monitoring mechanisms and the status of German and Irish claims.

Markus Weyer, chairman of German consumer rights group DAGEV, who has testified to the committee, said: "In Germany, there are about 4,000 Equitable Life policy holders. The majority had long-term pension schemes where the contract [stipulated] payment of large premiums leading to an annuity.

"Most were sold from 1998. This is important as the company was already under financial pressure at that time. It must be specified that the company sold them very aggressively, using negative comparisons with other German companies and offering large payments."

He added: "The German policyholders, much like the Irish, are sitting between regulators. Nobody is willing to speak up for them. That is due to an obvious loophole in EU legislation. Pensioners spent most of their wealth, often liquidating assets, so many now face the prospect of old-age poverty. We believe the EU failed to institute proper directives that protect EU consumer interests in the field of insurance services."

"There was a failure of various regulators to be able to assist their own nationals," said Wallis of German and Irish policyholders. "These people were being ping-ponged between various authorities. What we're likely to see is a number of recommendations that improve EU policymaking and access to redress."

Compensation for German and Irish policyholders is a tricky issue. "The FSA [UK Financial Services Authority] clearly does not consider German and Irish victims to be under its jurisdiction," said Weyer. "We don't expect the British government to provide compensation for German policyholders. Demanding compensation at the European Court [of Justice] is still theoretical. It would be a very expensive and lengthy process."

The committee, initially set up for one year, will be seeking an extension to hear further evidence on the case and to consider the findings of a report being submitted by the UK parliamentary ombudsman in November, which could find the national government guilty of maladministration.

The committee's final report, which was originally scheduled for the end of this year, will now be delayed until early 2007. An interim report will be voted on at a Parliamentary plenary session in July.

Daily Telegraph: John Greenwood

Comment: Another impotent inquiry into Equitable
(Filed: 28/06/2006)

A European Parliament committee has asked for more time to consider the intricacies of the near collapse of Equitable Life.

Investigation-weary Equitable Life policyholders will not be surprised to learn that a European Parliament committee has asked for more time to consider the intricacies of the near collapse of the life insurer.

The role of regulators in overseeing the way with-profits funds are administered is complicated enough for British politicians and lawyers, so it should come as no shock that a group of MEPs that includes former EastEnders actor turned politician Michael Cashman has decided to wait until after Ann Abraham, the Parliamentary Ombudsman, gives her verdict on the Government's role in the Equitable debacle before drawing its own conclusions.

The European Parliament committee is charged with looking into whether the UK Government failed to regulate the insurer adequately between 1989 and 2000, covering much of the same ground as Abraham's own investigation. Her inquiry will have taken two years by the time its conclusions are published.

But after the disappointments of the costly failed court cases against ex-directors and auditors and Lord Penrose's own two-year probe, any Equitable Life with-profits policyholders still hoping for salvation should not hold their breath. Neither the Parliamentary Ombudsman nor the European Parliament committee can force the Government to compensate policyholders.

Abraham can order the Government to pay up, but as happened with her finding earlier this year that the Government was to blame for encouraging workers to pay into rotten final-salary pensions, it can ignore her.

Similarly, the European Parliament has no power to order compensation. It can merely recommend changes to the law should it be found wanting, even though the Financial Services Authority has already overhauled the way with-profits funds are administered.

Should Abraham and the European Parliament find the Government guilty of misadministration in relation to Equitable Life, political pressure will grow for compensation, but the perception that Equitable policyholders are all wealthy people will always reduce that pressure.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/06/28/cmjohn28.xml&menuId=244&sSheet=/money/2006/06/28/ixperson.html