Daily Telegraph’s Equitable campaign coverage

Call for Equitable Life payouts to avert fall in confidence

Daily Telegraph, by Yvette Essen,22nd July

Confidence in pensions will be eroded if the Government does not pay out compensation to Equitable Life policyholders who lost up to half of their investments when the insurer mutual almost collapsed, the shadow pensions minister has warned.

Nigel Waterson said if Gordon Brown ignores the demands of its Parliamentary Ombudsman, who last week called on the Government to make payouts after finding it guilty of "serial maladministration" in regulating the insurer, people would be discouraged from saving for their retirement.

"There are people who did all the right things, saving for retirement, and had every reason to expect a comfortable retirement as a result," he said, commenting on the 1m policyholders who lost out when Equitable closed to new business in 2001 after failing to pay guaranteed bonuses

Mr Waterson, who has been shadow pensions minister since 2003, said there were different reasons for the demise of Equitable and the Occupational Pensions scheme scandal. In the Occupational Pensions case, the Government initially resisted the Parliamentary Ombudsman's calls to compensate 150,000 people who lost money when their pension schemes were wound up. However, Mr Waterson said similarities would inevitably be drawn if money was not forthcoming for Equitable policyholders.

"There is a read-across to the 150,000 who lost their occupational pensions. In the eyes of the public they will look part of the same problem," said the Conservative MP for Eastbourne. "From my broad experience, it was hugely damaging to pensions confidence to have a four to five year battle, with ministers having to be dragged kicking and screaming to each successive concession."

Last week the Parliamentary Ombudsman unveiled her long-awaited report into the failings of Equitable. Ann Abraham accused the Government of "a decade of regulatory failure" and said it should create and fund a compensation scheme. She also called for regulatory bodies to apologise publicly to policyholders for their failure.

Pressure has been piling up on the Government - which says it will respond to Ms Abraham's findings after the summer recess. More than 4,100 people have now signed up to The Daily Telegraph's campaign for compensation

Government left with no place to hide after Equitable Life report

By Vanni Treves, Daily Telegraph 18th July 08

http://www.equitablelifemembers.org.uk/

At long last Parliamentary Ombudsman Ann Abraham's report into the regulation of Equitable Life sees the light of day. It is an enormous piece of work; four years in the making and 2,819 pages long. Its conclusions are trenchant and damning. The factual evidence on which they are based is detailed, objective and balanced.

The enormous body of evidence and paperwork offered to her - much of it, on the Government's part, very belatedly - is exhaustively discussed and analysed.

It is very hard to see how any part of her report can be challenged by the fair-minded.

What are the conclusions? She summarises them in the seven carefully chosen, very bold words on the front page of every part of the report. Equitable Life: A Decade of Regulatory Failure. She has made 10 major findings of maladministration against the Financial Services Authority, the Government Actuary's Department, and the former Department of Trade and Industry. There are five findings of substantial injustice including financial loss and a "justifiable sense of outrage".

Ms Abraham recommends that the public bodies should apologise for the "sense of outrage" they have caused and also, as her "central recommendation", that the Government should establish and fund a compensation scheme for those affected by "serial regulatory failure".

Even the Ombudsman's summary of her report reads like a lexicon of failure: "iniquitous and unfair", "serial maladministration", the regulators were "passive, reactive, complacent", their actions "largely ineffective and often inappropriate". She leaves no hiding place for the Government.

This isn't a complete surprise. Lord Penrose wrote a report four years ago which, although his terms of reference prevented him from allocating blame, made it obvious to all who read it that he was appalled by the regulators' total lack of rigour. The Government reaction in 2004 was a depressingly disingenuous example of playing politics. The minister quoted extensively and selectively, highlighting the lack of blame placed on regulators when she was well aware that the terms she gave Lord Penrose prohibited such a finding.

In spite of the politics, our calls for the Ombudsman to investigate were successful. We supported the inquiry with a mountain of documentary evidence from the past and numerous meetings with the team. The lay of the land became clear in 2007 when the Government issued 500 pages of argument and rebuttal to the Ombudsman's early draft. This led to yet another delay, but the final report is all the more authoritative for it.

It has been a very long time coming, but the good news for our policyholders is that it pulls no punches. The inquiry has been thorough and erudite. This is exactly the sort of role Parliament envisaged for its Ombudsman - an independent voice with the authority to look at government departments on behalf of Parliament and the public and to decide whether they have been doing what is expected of them. Most importantly, of course, she has the role of recommending government compensation where her investigation demonstrates to her that compensation is appropriate.

I would love to be reporting here that the struggle for accountability and redress is complete, but we have yet to hear the Government's response. It has seen the drafts of the report during its progress so there should be little new to come to terms with.

I sincerely hope that ministers recognise that the game is up. Parliament's own referee has spoken unequivocally.

After eight years, it is time for the Government to accept reality, accept the Ombudsman's recommendations and make good the hardship caused to our policyholders, many of whom are old and vulnerable. Surely the Government has learned from its experience with the Occupational Pensions Schemes - there will be no peace until it agrees to compensation.

It can accept the Ombudsman's conclusion with good grace or it can sully its reputation and be forced to back down.

I don't see the financial cost changing - only the cost in credibility, fairness and decent behaviour.

The question that has been put to me many times since the report was published is, "Should the taxpayer pay when the regulators failed to stop Equitable Life's own former management from getting it wrong?" It is a fair question. My answer is - look at the report.

This wasn't a slip, the odd human error. The regulators had the information and they had the powers. They didn't consider the information adequately and they didn't use their powers and they kept not doing that for a decade or more.

Of course, Equitable also had faults; but it has paid hundreds of millions of pounds to hundreds of thousands of policyholders dealing with those faults - and don't forget that as a mutual, Equitable can only compensate one policyholder at the expense of others.

Equitable shouldered its responsibility at a cost its hard-pressed policyholders could ill afford.

Parliament's own independent voice has said that "serial regulatory failure" has caused losses to policyholders and it is right for government to put those policyholders back into the position they would have been in had that maladministration not happened.

I recommend you read the Ombudsman's 48-page summary, or just her press release, to get a flavour of how badly our policyholders were let down by regulators who were given responsibility and powers by Parliament to look after their interests.

There are important constitutional and moral issues at stake. We will campaign tirelessly for the Government to do the right thing for policyholders. The office of the Parliamentary Ombudsman might as well be disbanded if a report as strong and rigorous as this is ignored or delayed.

MEP joins clamour for Equitable Life justice

By Yvette Essen 20/07/2008

MEP Mairead McGuinness, the chairman of the European Parliament committee of inquiry which last year criticised the UK government for its regulation of Equitable Life, has stepped into the battle to force the Government to pay compensation to policyholders.

She has written to thousands of Equitable policyholders, as well as fellow MEPs, pledging to "push for action".

The Government has so far ignored the European Parliament's calls for money to be paid to the million-plus policyholders who saw up to 50pc wiped off their investments when Equitable was unable to honour promised bonuses and was forced to close to new business in 2001.

Mrs McGuinness' letter follows last week's Parliamentary Ombudsman's report into Equitable's near-collapse, which accused the Government of "a decade of regulatory failure".

Mrs McGuinness called this report an "important development" and said she was encouraged by its findings.

Her letter stated: "I intend to pursue the issues raised in our report," adding: "We will be reminding the British Government of its obligation to respond to our report."

Treasury committee seeks Equitable Life solution

By Yvette Essen 20/07/2008

MPs will this week call on fellow members of the Treasury Select Committee (TSC) to help identify ways to pay compensation to the hundreds of thousands of Equitable Life policyholders who lost out from the near collapse of the mutual insurer.

Following a damning report last week by the Parliamentary Ombudsman, which accused the Government of a "decade of regulatory failure", Philip Dunne, the Conservative MP for Ludlow, will meet with the 13 other committee members on Tuesday and press them to hold a formal hearing.

This would be focused primarily on finding governmental resources which could be used to pay out money to policyholders who saw up to 50 per cent wiped of their investments following Equitable's demise in 2001.

Dunne said: "With the Parliamentary Ombudsman categorically confirming maladministration and calling for compensation, there is clearly a case for the TSC to consider a compensation regime and how this would impact on the public finances.

"Such a cross-party inquiry might help the Government to reach a quick decision and encourage prompt payment to those policyholders to whom compensation is due. This should not be dragged out for years, since policyholders need compensation payments while they are still here to benefit."

The Parliamentary Ombudsman's ruling has been described by the Equitable board as policyholders' "best chance of gaining compensation", as Ann Abraham's independent report has the power to make recommendations.

Policyholders have been fighting for money after Equitable was forced to close to new business in 2001 after being unable to pay guaranteed bonuses to policyholders. Equitable Members Action Group has estimated policyholders lost more than £4bn due to regulatory negligence.

On Wednesday, Abraham's report found the Government guilty of 10 counts of maladministration and five of creating "injustice". She said that the Government "fell far short of acceptable standards of good administration" and recommended it funds a compensation scheme.

Although the Treasury and the Financial Services Authority (FSA) - which were criticised in her report - have said they need time to read the 2,819-page report before commenting, the Government is coming under intense pressure to pay compensation. Dunne said in addition to calling for a TSC hearing to determine where money could be located for compensation payouts, he will also suggest the committee looks again at the consequences of regulatory failings over Equitable.

Parliamentary committee to question those to blame for Equitable Life

Daily Telegraph, by Robert Winnett, 18th July

The intervention of the Public Administration select committee is expected to add to pressure on the Government to pay compensation to more than one million people who lost up to half their life savings.

A report from the Parliamentary Ombudsman has found that the collapse of Equitable Life followed a "decade of regulatory failure". The inquiry said that the public had been misled and that the Government should apologise and pay compensation.

The Treasury said that it was carefully considering the findings and would announce its response in the autumn. However, well-placed sources have indicated that the Government will block the estimated £4 billion compensation payout.

The Public Administration committee has said it would now be holding its own inquiry into the Ombudsman's findings. The head of the committee also suggested that he backed the findings of the report.

Tony Wright, a senior Labour MP who chairs the committee, said: "Regulation is never an easy job, but the failings that have been revealed in this case appear to be on a spectacular scale.

"In a meticulous and comprehensive report, the Ombudsman has made ten serious findings of maladministration leading to injustice.

"We trust that her report will receive the considered and respectful response from government that it deserves."

The Conservatives have pledged to introduce their own plans for a compensation scheme in the autumn if the Government blocks payouts to Equitable victims.

Equitable Life to lobby MPs over compensation

Daily Telegraph, by Yvette Essen 18th July

Equitable Life will write to every Member of Parliament to urge them to call on the Government to pay compensation to policyholders who lost out following the near collapse of the insurance group.

The company will ask MPs to press the Government to carry out the recommendations of the damning report delivered by the Parliamentary Ombudsman yesterday.

Ann Abraham's extensive publication accused the Government of "serial maladministration" and "a decade of regulatory failure" and called on it to set up a compensation scheme for the people who lost up to 50pc of their investments when Equitable was forced to close to new business in 2001.

Charles Thomson, chief executive of the company, said Equitable will lobby MPs in the next few weeks as most have constituents who suffered from the demise of the society. "We will talk to MPs of all parties to try to make sure that when there is a debate they will make a case in the House of Lords and House of Commons, so there is support for our policyholders," he said. "We will write to all MPs so our views are known."

Mr Thomson added that while Equitable board members have "talked in general terms" with a number of MPs before Ms Abraham's report was unveiled, now her findings have been made public they can "brief MPs fully".

He added that Equitable also plans to meet with "a dozen or so" key individual MPs. It is thought that the society will call on figures such as pensions minister Mike O'Brien, shadow pensions minister Nigel Waterson and Liberal Democrat Treasury spokesman Vince Cable.

Mr Thomson said that once Equitable's management had read through Ms Abraham's report, which runs to 2,819 pages, a letter may also be sent to its 500,000 surviving policyholders, urging them to call on their local MPs "to support the findings of the Parliamentary Ombudsman".

In the past week, more than 3,100 people have signed The Daily Telegraph's campaign, calling for government compensation.

Kitty Ussher, Economic Secretary to the Treasury, said yesterday in response to the findings: "The length and complexity of the report means that the Government will need to consider the report carefully before giving its response in the autumn."

Ombudsman to call for Equitable payouts

Daily Telegraph, by Yvette Essen, 16th July 08

A damning report by the Parliamentary Ombudsman will call for the Government to pay compensation to Equitable Life policyholders and investors following the insurer's near-collapse in 2001.

The Daily Telegraph has learned that the Ombudsman's findings, which are due to be published tomorrow, also call for public regulatory bodies to apologise for failures.

The long-awaited report looks at the roles of the Government Actuaries Department, the Department of Trade and Industry, the Financial Services Authority and the Treasury in the handling of the crisis.

Equitable Life, which was valued at over £26bn and had 1.5m policyholders at its peak, was forced to close to new business when it was unable to honour guaranteed bonuses for policyholders.

The company's dramatic fall was one of the biggest scandals to hit the financial services industry. More than 1m policyholders saw their savings and pensions slashed by up to 50pc following its demise.

Many policyholders - 30,000 of whom have died since Equitable Life closed to new business in 2001 - have campaigned for compensation from the Government.

More than 2,400 have so far signed a petition set up last week by The Daily Telegraph calling for the Government to pay up.

It is understood that Parliamentary Ombudsman Ann Abraham's extensive report will not only slam the Government for its role in regulating Equitable Life, finding it guilty of maladministration and injustice, but will also recommend it set up a compensation scheme.

Sources said the report will call for a committee to be established and funded by the Government within six months of any decision by the Government and Parliament to create such a programme.

A timetable has also been outlined in her list of recommendations, suggesting that the scheme take no longer than two years to determine who is eligible for money and how much they should be paid.

It is believed that she will admit that such a compensation scheme could have an impact on the public purse.

However, the Ombudsman will say she hopes the Government will return people who have suffered from Equitable Life's troubles to the position they would have been in had the maladministration by the Government not occurred.

Equitable Life victims face battle for compensation

Andrew Porter, Daily Telegraph, 18th July

Victims of the Equitable Life collapse face a long legal battle to get compensation despite a report this week which is expected to be critical of the Government's role.

Gordon Brown yesterday indicated that he would not simply allow billions to be paid out if the report by Parliamentary Ombudsman criticises the way regulators failed to protect customers.

The Prime Minister maintained that the company's "culpability" in the case had been proved. More than one million customers lost up to 50 per cent of their pensions and savings when the company was brought to the brink of collapse in 2000.

The Prime Minister was in charge at the Treasury when the firm's policies were slashed after it emerged that customers' investments were worth £3bn more than the company's total assets.

At his monthly press conference Mr Brown was asked whether he could foresee any circumstances where customers who had lost out heavily would be entitled to compensation.

He said: "This is a legal question. We have dealt with issues that show culpability of Equitable Life as a company in this matter. "There have been issues raised about the Government and we have got to look at the legal judgments that are made."

That means that a legal battle between the Treasury and policyholders is set to start immediately as soon as the report is released. It is understood that the Treasury is still preparing its response to the report from Ann Abraham, the Parliamentary Ombudsman, which will be released on Thursday.

But Mr Brown is fully aware of the explosive nature of its probable findings having been close to the Equitable Life fall-out for almost his entire time as Chancellor. Equitable's customers are preparing to pursue the Government for up to £4 billion in compensation.

They argue that ministers were unable to stop the regulators "falling asleep at the wheel." But Mr Brown's words yesterday will anger policyholders.

He indicated that he will not give up compensation or admit responsibility without a fight. It is understood that Treasury lawyers are likely to argue that an earlier report by Lord Penrose into the issue showed the company was primarily at fault.

That report, in March 2004, accused former Equitable management of "dubious" practices and of nurturing a "culture of manipulation and concealment". The Government ruled out compensation as a result and was accused by MPs of "abandoning" those who had lost their savings.

But the new report - which has been delayed for two years - is expected to lay the blame at the door of City regulators and the Treasury for failing to protect policyholders.

After a draft report was released to MPs the Treasury issued a response that ran to 500 pages. In June last year the European Parliament called on the UK government to compensate Equitable policyholders after a damning report from a committee of MEPs investigating the debacle.

The report blamed ministers for failing to properly implement EU legislation on insurance and describes the UK's financial regulators as having been "excessively lenient" in failing to ensure that Equitable Life had been solvent.

Equitable customers will point out that Mr Brown did everything to save Northern Rock savers by seeking a private sector solution of the failing bank and finally taking it into national ownership thereby safeguarding deposits but adding £100 billion liabilities to the country's books.