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: 30/01/2009 - Press coverage of Ann Abraham and EMAG before select committee

30 January 2009 - Press coverage of Ann Abraham and EMAG before select committee

Parliamentary Ombudsman slams Government response to Equitable Life report

Daily Telegraph
By Yvette Essen, 29 Jan 2009

The Parliamentary Ombudsman has launched a stinging attack on the Government, accusing it of twisting the findings of her in-depth report into the demise of Equitable Life.

Speaking publicly for the first time since the Government rejected a number of the report's findings that it was guilty of maladministration in the lead-up to the near collapse of the mutual insurer, Ann Abraham slammed the Government for "rearranging the evidence".

"I think the Government's response provides insufficient support for the rejection of my findings," she said. "It is strong on assertion, it is short on facts. The response says that I said something different to what I actually said, and then says why it disagrees with something I didn't say.

"I am disappointed to see the Government picking over and reinterpreting my findings of maladministration and injustice. Re-arranging the evidence, re-doing the analysis and acting as judge on its own behalf."

Ms Abraham's comments that the Government's response a fortnight ago was "unsatisfactory" and it had provided "insufficient support" for the rejection of some of her findings were made to the Public Administration Select Committee.

The committee has been holding hearings after Ms Abraham published her damning report in July, saying the Government was guilty of "a decade of regulatory failure" in the build-up to Equitable being forced to close to new business in 2000 after it was unable to pay guaranteed annuities.

She found the Government guilty of maladministration on 10 occasions, but the Government has only accepted five findings of maladministration in full, four in part and rejected one. It has agreed to follow her recommendation that it pays compensation to policyholders, who lost up to half of their savings when the insurance mutual's plight came to light, although concerns are mounting that it will resort to means-testing.

Ms Abraham also hit out at the Government for failing to follow her recommendations that a clear timetable is set out to pay compensation. She added that its response "begs the question as to what the purpose of regulation was supposed to be".

She said: "The Government appears to be suggesting that whatever the regulators had done, it would have made no difference to the events which followed. Frankly, I find that astonishing."

Charles Thomson, chief executive of Equitable, also gave evidence to the committee yesterday and described the Government's response to Ms Abraham's 2,819-page report as "wholly inadequate". He said: "We think that Parliament should not accept the Government's response to the Ombudsman's report and we hope that Parliament can find a way to influence Government."

Equitable Members Action Group also urged MPs to lobby the Government for full compensation for policyholders. Spokesman Paul Braithwaite said: "It is Parliament's duty to hold the Government to account over the underhand way it has subverted the Ombudsman's proposed compensation scheme. We call on Parliament to compel the Government to honour the Ombudsman's compensation scheme - otherwise, what is the point in the Ombudsman?"

The committee said it would hold a further session, and is likely to call a witness from the Treasury.


Watchdog slams Treasury on Equitable

Financial Times By George Parker and Andrea Felsted
January 29 2009

Ministers were accused on Thursday by a top watchdog of twisting words and being disrespectful in their handling of the Equitable Life case, in which up to 1m policyholders face a further uncertain wait for any compensation.

Ann Abraham, parliamentary ombudsman, was clearly irritated that Yvette Cooper, Treasury chief secretary, had rejected her call for a speedy compensation scheme for policyholders who lost up to £5bn in Equitable's near-collapse in 2000.

Ms Cooper this month apologised for regulatory failures and charged Sir John Chadwick, a judge, to review the compensation claims, but it is unclear how long that review will take, who will benefit and by how much.

Equitable policyholders described her decision as "shameful", claiming it is an attempt to kick the issue into the next parliament, while some policyholders die in relative poverty.

Ms Abraham told MPs on Thursday said she was "disappointed" with the way the Treasury dealt with her report of July 2008, which called for compensation to atone for "a decade of regulatory failure".

She claimed the Treasury had "picked over and misinterpreted" her report, and she was now wondering whether it was worth her while carrying out her original investigation in the first place.

"If what you do is represent the findings to say something different to what I said - and then you disagree with it - that is a flawed approach," she told the Commons public administration committee.

Ms Abraham said that while the tone of Ms Cooper's response was respectful, she added: "I'm not sure the content of the response is respectful."

She also highlighted Ms Cooper's insistence that - in spite of the ex-gratia offer of limited compensation to some policyholders - she did want to set up a precedent where the taxpayer was automatically liable for regulatory failures.

Ms Abraham said if such a principle existed, it raised questions about the purpose of her inquiry into maladministration. She said parliament had never voted to explicitly reject compensation payments where regulators fail.

The ombudsman was also critical of Ms Cooper for offering to pay compensation to those who had suffered "disproportionate impact", arguing that this concept had not been defined.

Ms Cooper insisted earlier this month that she had a duty to protect the public purse and that parliament had "accepted that it is not generally appropriate to pay compensation, even where there is regulatory failure".

Paul Braithwaite, general secretary of the Equitable Members Action Group, an independent association of members and policyholders, said that about 90 per cent of investors who had lost out would be excluded from any possible compensation under the process set up by the government.

"Means testing simply cannot work," he said.

"It is a sorry tale when 30 years ago this [the Parliamentary Ombudsman] was set up as an alternative free dispute resolution, and MPs are asking us to go to law. That is what this process was set up to provide an alternative to," he added.


Ombudsman attacks government over Equitable Life

The Herald, Simon Bain, January 30 2009

The parliamentary ombudsman yesterday accused the government of "rearranging the evidence" and mis- representing her highly critical report into Equitable Life.

Ann Abraham told the select committee on public administration that she was "astonished" at the government's "unsatisfactory" response to her 2800-page, four-year report, which urged an independent compensation scheme for up to 1m former and current policyholders at Equitable Life.

Despite admitting maladministration, the government has rejected the ombudsman's remedy and asked a retired judge Sir John Chadwick to advise on a means-tested hardship fund, which could take years to pay anything out.

It has emerged that the government has directed the judge not to consider any policyholder losses arising before 1999 - effectively ruling out 90% of all claims.

Abraham told MPs on the all-party and Labour-led committee, which published its own report last month in full support of her recommendations, that she welcomed ministers' acceptance of maladministration, which had led to injustice at Equitable.

She rejected a suggestion that the government had been malign or malevolent in its approach to her recommendations.

However, she told MPs: "I am disappointed to see the government picking over and re-interpreting my findings of maladministration and injustice, re-arranging the evidence, re-doing the analysis and acting as judge on its own behalf.

"The government appears to be suggesting that whatever the regulators had done, it would have made no difference to the events which followed and frankly I find that astonishing."

Abraham said the government's introduction of a new concept of "relative loss" for the judge to consider - by comparing the losses due to maladministration to those caused by the society's management - was a "complete red herring".

She went on: "The remedy I recommended was for injustice resulting from maladmini-stration and not for anything else The response says I said something different to what I actually said, and then says it disagrees with something I didn't say."

Equitable Members' Action Group, which now boasts 21,000 members, told the committee that the government had effectively excluded any payment at all to 90% of all Equitable Life victims by precluding Chadwick from even considering any losses incurred before May 1999.

Emag's Paul Braithwaite said: "Emag believes that it is Parliament's duty to hold the government to account over the shabby way it has tried to subvert the PO's recommendations. We call on Parliament to assert its authority and force the government to set up a proper tribunal for compensation."


Government criticised over Equitable Life scandal

The Times. By Miles Costello

Parliamentary Ombudsman launches scathing attack over Government's handling of near-collapse of Europe's oldest mutual

The Government was today accused of acting as its own judge and jury in the Equitable Life scandal as part of a damning indictment by the Parliamentary Ombudsman of its handling of the near-collapse of Europe's oldest mutual.

Ann Abraham said it was "disappointing" that the Government had chosen to reject her central call for a compensation scheme for the more than 1 million Equitable policyholders who between them lost an estimated £4 billion.

In an appearance before the Public Administration Select Committee, Ms Abraham also told MPs that the Government had misinterpreted some of her findings and publicly disagreed with things she had not even said.

"Once again, the Government has thought fit to reject findings made by the Ombudsman after a lengthy, detailed, complex, and rigorous investigation," Ms Abraham said in her formal response submitted to the committee today.

She said the Government's reaction to her proposals, which included a call for an apology, "raises a number of issues, many of them fundamental, which are of concern to me - and which I believe should also concern the committee and Parliament more generally."

Ms Abraham said she was particularly concerned that the State had rejected her findings of maladministration and injustice in the Equitable case. She said she was worried by the basis for the decision as well as the Government's proposed alternative.

Earlier this month, Yvette Cooper, the chief secretary to the Treasury, apologised to Equitable's policyholders and admitted that the Government and regulators could have done more to prevent the crisis at the member-owned firm. She said the Government would appoint Sir John Chadwick as an independent expert to determine payments for policyholders who had been "disproportionately affected" by the Equitable disaster. But she rejected calls for a compensation scheme and gave no timeframe for introducing what appeared to be a means-tested payout.

Equitable Life was brought to the brink of collapse in 2000 after the House of Lords ruled that it must honour its obligations to customers to whom it had sold guaranteed annuity policies. This left it with liabilities of £1.5 billion and forced it to close its doors to new business.

Campaigning policyholder groups such as the Equitable Members Action Group (EMAG) have helped to spur several inquiries, including by Lord Penrose and Ms Abraham.

EMAG dismissed Ms Cooper's apology and payout pledge as dirty tricks.


Ombudsman questions "irrational" interpretation of Equitable proposals

FT Adviser By Gareth Shaw

Parliamentary Ombudsman Ann Abraham has accused the government of "rearranging evidence and redoing analysis" in its proposals to compensate Equitable Life policyholders.

Speaking at a Public Administration Select Committee (PATC) hearing, Abraham said the government's response to her report into the maladministration of the life company "says I said something different to what I actually said, and then says it disagrees with something I didn't say".

In an additional memorandum to the committee, Abraham added that the government had "acted as a judge on its own behalf", rejecting the Ombudsman's findings and preferring its own conclusions - a fact which Abraham believed to be irrational and put into doubt the constitutional terms of the Ombudsman system.

"It does seem to me consistent with the intention of Parliament when it established my office that government bodies should, before such questions of remedy arise, reject my judgments on maladministration and injustice on the grounds merely that they disagree with those judgments or simply have a different view," she stated.

However, Abraham did not believe that her office was undermined by the government's decision, saying that the Equitable Life saga does not outweigh the thousands of other cases her department and the government agree on without argument.

The PATC hearing raised further doubts over the viability of introducing a compensation scheme based upon the disproportionate impact proposed a fortnight ago by the Treasury secretary Yvette Cooper.

Abraham voiced concerns over the lack of timetable for work to be done by Sir John Chadwick, the judge that has been assigned by the government to advise on the extent of losses suffered by Equitable policyholders due to regulatory maladministration.

There were suggestions that the process of compensating policyholders could be a laborious process, taking far longer than the two years outlined in the Ombudsman's report.

Charles Thomson, chief executive at Equitable Life, stated that while the life company would assist by providing as much policyholder data as possible, it would be "considerably difficult to know which policyholders are wealthy and which are poor".

Charles Walker, Conservative MP for Broxbourne, said that Chadwick may have to approach the HMRC to means test Equitable members, which would be "pretty unpleasant and personally intrusive".

Representatives of the Equitable Life policyholders reacted in outrage and stated that it found the decision to be "unacceptable, irrational and inadequate."

Colin Slater at the Equitable Members Action Group said that by placing Sir John Chadwick in his advisory role, the "the accused had appointed its own judge".


Government lashed over Equitable

BBC

The Parliamentary Ombudsman has criticised the government's approach to compensating investors in the Equitable Life assurance company.

Ann Abraham told MPs the government had misrepresented the findings of her report on the Equitable last year.

The government has finally agreed to offer compensation to some investors who lost money in the society.

But Ms Abraham said she was "astonished" at its "unsatisfactory" response to her report.

Disappointed

Ms Abraham welcomed the government's recent acceptance that there had been some maladministration which had led to injustice at the Equitable.

And she rejected a suggestion that the government had been malign or malevolent in its approach to her recommendations for compensation.

But she told MPs on the Public Administration Committee that the government had twisted the findings of her report.

"I am disappointed to see the government picking over and re-interpreting my findings of maladministration and injustice, re-arranging the evidence, re-doing the analysis and acting as judge on its own behalf," she said.

"The government appears to be suggesting that whatever the regulators had done, it would have made no difference to the events which followed and frankly I find that astonishing," she added.

Compensation scheme

Her report last year found that government departments and regulatory bodies had been responsible for maladministration in relation to the Equitable, amounting to a "decade of regulatory failure".

This contributed to the crisis at the society which, over the past nine years, has seen more than a million policyholders suffer large cuts to the value of their investment funds.

Last year, Ms Abraham recommended that the government set up a compensation scheme for those savers, a proposal the government had been resisting since the society closed to new business in 2000.

The precise form of the scheme will now be considered by a former Appeal Court judge Sir John Chadwick.

However the government wants it to compensate mainly for hardship, rather than all losses due to maladministration by the authorities.

Red herring

Ms Abraham said the government's introduction of a new concept of "relative loss" for Sir John to consider - by comparing the losses due to maladministration to those caused by the society's management - was a "complete red herring".

"The remedy I recommended was for injustice resulting from maladministration and not for anything else," she said.

The Ombudsman said the government had failed to give "cogent reasons" for rejecting some of her findings, and was scathing about its continued efforts to deny them.

"The response says I said something different to what I actually said, and then says it disagrees with something I didn't say," she told the MPs.


When Parliament turns its guns on a man, life isn't so equitable.

The Independent, by Simon Kerr

It's not too late to get interested in this. The thing's been four years coming and it'll be four years going. It's full of material for those who like to consider the efficacy of regulation, the ethical superiority of government to the market, and whether Parliament has any gumption any more. Equitable Life. I'm only just catching up with it. In front of the Public Administration Committee, the Parliamentary Ombudsman started out with all guns blazing, albeit in that muffled-muzzle way that public officials have. Nonetheless, it was possible to discern her acrid discontent.

Anne Abraham's report on the failure of the 30bn insurance company with its 1.5m policyholders has been rubbished by the Government. She had found 10 cases of maladministration, five of which led to injustice, and were therefore worthy of redress.

That's an expensive conclusion,so the Government reworked her evidence, made up some of its own, inserted a proposal to means-test compensation, and made any payment at the discretion of ministers. But perhaps not confident that this would muddy the waters enough, they've appointed an Appeal Court judge to advise, at his leisure, on who should be paid what.

His recommendations will then be passed on to be ignored by ministers (no doubt in a different government). It's a ministerial master class.

The Equitable Members Action Group gave us the chance to see one Colin Slater in action, a man on whose face was written a saga of worry, duty, care and disappointment. He showed us how cleverly the conditions of compensation had been constructed. The only cases of a) maladministration leading to b) injustice with c) real money attached to them stem from 1999 and the combination excludes 90 per cent of policy holders.

Bang. There it is. Or isn't. Mr Slater's harshest words were for Judge Chadwick, "the Treasury's hired hand" who was "giving a judicial veneer to what is a back-street process". He said: "What sort of court is it that the accused appoints the judge... to hear its appeal in private and to report at a time and place of its own choosing?"

David Heyes MP made the most depressing observation. He'd been urged to "stand up against the Chadwick process". He said there was nothing more that Parliament could do about Equitable Life. There had been a statement by a minister. There had been a debate in Westminster Hall. Instead, he advised the action group to exert itself some more (they've been hacking at this coal-face for many years already).

As one of the group said: "She's your parliament, and you must stand up for her." Ah, yes. The impossible dream. Parliament first!

And finally, perhaps the most pessimistic thought about the thickets of feckless regulation in the City: "A right without a remedy isn't a right at all. It's just a statement of honourable intent."

Or, words, words, words."


Equitable victims deserve 'instant compensation'

Daily Mail, By Becky Barrow

Charles Thomson chief executive of Equitable Life said the Government's response was 'wholly inadequate'

Victims of the Equitable Life scandal are being treated in an 'unpleasant' way and deserve immediate compensation, MPs were told yesterday.

Both the Parliamentary Ombudsman and Equitable's new boss unleashed scathing attacks on the Government's handling of the problem.

Hundreds of thousands of policyholders have seen their pensions wiped out after Equitable Life, Britain's oldest mutually owned insurer, came close to collapse.

Last July the Parliamentary Ombudsman, Ann Abraham, published a withering report ordering the Government to pay compensation.

But while the Government has accepted that regulators failed in their oversight of Equitable Life, it plans payouts only to those who were 'disproportionately affected'.

Yesterday Miss Abraham told the Public Administration Select Committee: 'I am disappointed to see the Government picking over and reinterpreting my findings.'

Equitable chief executive Charles Thomson said the Government's response was 'wholly inadequate' and said its approach towards compensation payments would be 'unpleasant, personal and intrusive'.