EMAG

The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

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Media Stories: 02/04/2007 - Simon Bain in the Herald

UK told it has ‘moral obligation’ to pay Equitable policyholders

The Herald: SIMON BAIN April 02 2007

The European Parliament's inquiry into Equitable Life will find the UK government guilty of failing to protect one million policyholders and declare that the government has a "moral obligation" to compensate them.

The single-issue inquiry, the first of its kind in Brussels for 10 years, will publish a 373-page report which says policyholders were deprived of the "rigorous supervision" and "adequate protection" stipulated by the European Union's Third Life Directive, and also of a fair hearing for their complaints by Britain's Financial Ombudsman Service (FOS).

The inquiry was expected to publish its findings formally next month. However, the entire report was released at the weekend by Diana Wallis, a LibDem MEP and member of the inquiry committee. The inquiry took evidence from across the industry, from Equitable's chief executive Charles Thomson, from Financial Secretary Ed Balls and from campaigners and policyholders. The Herald submitted detailed evidence in Brussels last November, focusing on mis-selling by Equitable Life salesmen and the failure of the complaints system.

In its conclusion, the report says: "It should be recalled that Equitable Life victims are not investors willing to take risks for the prospect of attractive returns. Rather, they prudently set aside money for their retirement with a highly reputable society, which led them to believe that their investment was absolutely safe. These policyholders were entitled to expect from the UK government thorough and rigorous supervision of all financial services providers ... including Equitable Life."

It goes on: "Had the UK regulators correctly applied the provisions of the directive, they would most likely have ... avoided the crisis at Equitable Life, which caused substantial losses to policyholders."

The current investigation by the parliamentary ombudsman, says the report, might well find maladministration, injustice, and the need to pay compensation. "However, the ombudsman's remit is limited in terms of both the time period and regulatory authorities covered ... In light of the above, the committee considers it appropriate to recommend strongly to the UK government to devise an appropriate scheme with a view to provide full compensation for Equitable Life victims both within the UK and abroad ... the committee sees it as a moral obligation for the UK government to assume responsibility for its failures and provide redress for citizens' grievances."

It says the compensation should be payable to all those non-GAR (guaranteed rate) policyholders and annuitants who were affected by the 16% cut in policy values in July 2001, and should cover all losses that were not market-related, "in particular those due to the society's practice (which remained unchallenged by regulators) of paying excessive bonuses during the 1990s".

The calculation should differentiate between policyholders according to when they joined, to reward those who had not benefited from the historic over-bonusing.

The report notes that a small minority of policyholders threatened Equitable with court action and reached settlements with confidentiality clauses, including the case revealed by The Herald of the Lanarkshire businessman who won £81,000 after a four-year fight and a "final offer" of £500.

It adds: "The high costs and risks under the UK legal system prevented the average policyholder from suing the society, and these consequently had to rely on the FOS as the only possible route to redress. The committee is of the opinion that this is clearly unfair."

Yet the FOS, says the report, froze all complaints and then appeared not to treat them on their merits, but on what effect resolving them might have on the society. There were "serious shortcomings" in the FOS's operation. "The committee therefore demands that the UK government urgently address these shortcomings, strengthen the FOS's capacities and ensure that it is truly independent from the Financial Services Authority."

http://www.theherald.co.uk/business/news/display.var.1300739.0.0.php


EU urges UK to compensate Equitable policyholders

Fri Mar 30, 2007 5:13PM BST

http://uk.reuters.com/article/bankingfinancial-SP/idUKL3048020520070330?feedType=RSS

LONDON, March 30 (Reuters) - EU lawmakers investigating the near-collapse of insurer Equitable Life have criticised "light touch" UK regulation in a report published on Friday, and called on Britain to set up a scheme to compensate policyholders.

The European Parliament -- which has no power over the British authorities or funds to offer compensation -- has for over a year been probing the 2000 debacle that almost wiped out the savings of a million policyholders in Britain, 8,000 in Ireland and 4,000 in Germany.

In the final 373-page report, the parliamentary committee confirmed previous criticism of poor cooperation and complacency among national regulators, as well as the European Commission's failure to do more to enforce implementation.

Diana Wallis, the British liberal MEP who wrote the report, said the redress systems were "a mess".

"People were pushed about from one place to another. They had a totally unsatisfactory response," she said on Friday. "This is not what people should expect from Europe's internal market. We have to do better if people want to have the confidence to save."

The committee called for Britain to "assume responsibility".

"The Committee... strongly recommends that the UK Government devise and implement an appropriate scheme with a view to compensating Equitable Life policyholders both within the UK and abroad," it said in the report.

The parliament had been expected to publish its final report after a report by the UK parliamentary ombudsman, but that was delayed in October and is now due to be published in May.

Reporting by Clara Ferreira-Marques, editing by Erica Billingham;

Email: clara.ferreira-marques@reuters.com


Damning report on Equitable Life

By Andrew Bounds, Financial Times

Published: March 31 2007

The British government should compensate the more than 1m investors who lost billions of pounds because of the crisis at Equitable Life, a damning draft report by European legislators published yesterday says.

The MEPs claim that the UK's "light touch" regulatory policy was to blame for permitting the life assurer to fail and that this could be repeated elsewhere in Europe.