Equitable Life members step up pressure on Gordon Brown for £4.5billion bail-out

By Jeff Prestridge, Mail on Sunday
26th October 2008

More than a million Equitable Life policyholders are still waiting to hear whether the Government will compensate them for losses incurred as a result of the near-collapse of the mutual eight years ago.

Three months ago, Parliamentary Ombudsman Ann Abraham produced a damning report into the involvement of the Financial Services Authority, the Government Actuary's Department and the Department of Trade and Industry in Equitable Life in the years leading to its sudden closure to new business in 2000.

She accused them of maladministration --failing to spot that Equitable Life was in dire straits through much of the Nineties - and called for compensation for policyholders who saw the value of their plans shattered as Equitable Life's management struggled to keep the mutual afloat. The cost of compensation is estimated at £4.5billion.

Though the Government promised to respond to Abraham's findings by the autumn, when Parliament returned, it has yet to do so. Kitty Ussher, who made the pledge, has been removed from her position as Economic Secretary to the Treasury. A decision on compensation now rests with her replacement, Ian Pearson.

The Treasury refuses to confirm to Financial Mail whether a date for a response to Abraham's report has been set. A response could be delayed until mid-December.

The Government's tardiness has upset many Equitable Life policyholders, some of whom voiced their anger at the AGM of the Equitable Members' Action Group in central London on Tuesday.

EMAG has spent the past eight years battling for compensation, but in the wake of Abraham's report has increased its lobbying of MPs in an effort to put more pressure on the Government.

Among the 130 Equitable Life policyholders at the AGM was 67-year-old Terry Sylvester, a joint owner of DIY store Silver Star in Barry, South Glamorgan.

Terry, who runs the firm with his younger brother David, still has a third of his total pension funds with Equitable Life. His holding was previously worth much more.

A keen cricketer who still opens the batting for Sully Centurions' fourth team, Terry says he has delayed his retirement as a result of the Equitable Life debacle.

'Until I know where I am regarding compensation, I can't think about putting my feet up,' he says.

'It seems incredible that the Government is happy to prevaricate when many of Equitable's policyholders are in their late 70s and early-80s and 15 policyholders are dying every day. It's a disgrace.'

Equally angry is Peter Murray, a 50-year-old agency nurse from Waterloo, south London. He has recently converted his Equitable Life pension into a lifetime annuity, but the £470 a month it provides is a fraction of the income he was on course to receive before Equitable Life went into near-meltdown.

'In 1988, I was persuaded by an Equitable Life salesman to transfer all my pensions to the mutual,' he says. 'I was promised the earth.

'The Parliamentary Ombudsman found the Government guilty of widespread maladministration and it should now do the honourable thing by agreeing to compensate people like me.'

Paul Braithwaite, EMAG secretary, is confident the Government will have to agree to a compensation plan. EMAG wrote to 180,000 Equitable Life policyholders after Abraham's report, urging them to contact their MPs and ask them to press the Government for compensation. EMAG was backed by Equitable's board, which also called on members to contact their MPs.

The pressure group demonstrated at Labour's party conference in Manchester last month, carrying a coffin to symbolise the policyholders who have died while waiting for compensation.

Braithwaite says: 'Our case is stronger than ever. The Government has bailed out Northern Rock as well as Bradford & Bingley. It has £37billion to bail out our biggest banks and it provided a 100 per cent guarantee to savers with Icelandic bank Icesave.

'It would not make sense if it now turned round and excluded us from compensation. If it refuses to act on Abraham's recommendation, we will kick up an almighty stink. We will not go away.'

Over the next few weeks, the influential Public Administration Select Committee will hear evidence on Abraham's report. It is likely to put more pressure on the Government to pay up.

In a separate move, Phil Willis, Liberal Democrat MP for Harrogate and Knaresborough in North Yorkshire, has tabled an early day motion urging the Government to implement the Ombudsman's recommendations. It has drawn support from more than 50 MPs.

EMAG has set up regional groups to put pressure on MPs to support the case for compensation . Equitable policyholders can find details at www.emagregional.org.uk