22/12/2002 - Europe, your options, and international contacts
An update from Leslie Seymour
21/12/2002 - Update following Vanni Treves Interview
In the light of the Channel 4 Vanni Treves interview EMAG wrote to the Penrose Inquiry about concern that Treves and the Parliamentary Ombudsman were both implying a remit to the Inquiry beyond the Treasury's parameters.
The letter included: "....it would be timely and appropriate for the Inquiry to immediately re-state the limit of the remit i.e. "...not his role to make determinations of liabilities between the parties"
"....careful not to assume the proper function of the courts. Any decision to award compensation in the absence of a determination of liability would be a matter of public policy for the Government."
Hugh Burns, civil servant secretary to the Inquiry, replied immediately (20th Dec) but declined EMAG's suggestion. Click here for his reply
21/12/2002 - EMAG ask members to write for help
Policyholders are asked to write to their MP at The Commons before Parliament reconvenes to request renewed pressure on the PO to reverse her recent decision to continue "waiting for Penrose"
18/12/2002 - Letter from Equitable to EMAG
To Alex Henney from BOTH vice chairmen of ELAS (Sir Philip Otton and Peter Smith) in response to EMAG’s letter 29th Nov, 2002 suggesting that the non-executive directors should replace Vanni Treves with a full-time company doctor as chairman.
13/12/2002 - Letter to Howard Davies of the FSA
Highlighting the issues which EMAG wishes the FSA to take action on. To read the original letter to which this is a response click here
12/12/2002 - Committee Minutes
Click here to read the committee minutes.
11/12/2002 - Comments On The Board's Memorandum And Articles Review
By Alex Henney
11/12/2002 - Briefing on Governance consultation
By Paul Braithwaite
11/12/2002 - Email to members: URGENT: EMAG asks you to act now on Equitable Life’s Governance proposal:
Time is running out FAST on the Society’s consultation period for changing Equitable Life’s archaic constitution. Your response must be received by the Society by Monday 16th Dec. Fortunately, you can E mail your suggestions to:
Despite EMAG submitting a petition in May with more than 16,000 signatures to hugely reduce the number of members needed to call for an EGM or to propose a resolution, THE BOARD TOTALLY IGNORED THE PETITION.
Please, send an E mail today to email@example.com with your views. To help you here’s a suggestion list:
- The number of members required to call a special meeting should be reduced to 1,000, and to propose a resolution 500
- Selection of directors by "first past the post" positive votes, with no negative votes and no chairman’s proxies.
- Provide financial information at least up to contemporary "best practice", as recommended by the FSA.
- Limit Equitable Life’s directors number of OTHER directorships to not more than five.
- Voting weight proportional to each individual member’s guaranteed fund.
- Provide policyholder, on request, with calculation of valuation.
New briefing papers by both Alex Henney and Paul Braithwaite are on EMAG’s website. Also, see EMAG’s comprehensive proposal of 16th October, which was TOTALLY ignored by the Board. The trivial proposals put forward by the Board are viewable on the Equitable’s moribund website at: www.equitable.co.uk.
Why not "paste" from EMAG’s above list as the basis of your E mail response? You should confirm that you are a current member of the With Profits fund. Please, do express your views – whether they’re similar to EMAG’s or not.
Otherwise, you will only have yourself to blame!
General Secretary, EMAG
11/12/2002 - Letter from the new Parliamentary Ombudsman
To the "E 7" policyholder groups, in response to written request to broaden investigation.
11/12/2002 - Norfolk policyholder group meeting
On Friday 31st January at 11am in central Norwich there will be a meeting to which ALL types of Equitable Life policyholders are invited. There will be a panel discussion including a couple of MPs and a couple of leading action group activists. It is hoped that an Equitable Life board director will attend.
For details, please E mail Nicholas Oglethorpe: firstname.lastname@example.org
10/12/2002 - Letter to Mssrs Mr. Tiner and Mr. Strachan of the FSA
Following up on the Cazalet and Slater findings.
08/12/2002 - European Regulators
As you no doubt know, European countries have their own individual regulators who control the conduct of companies selling insurance/assurance type policies within their jurisdiction.
It would be very useful material in any European court action to know about the response from these regulators to complaints made by international policyholders.
Please would you send details by e-mail to: Leslie.Seymour@skynet.be
06/12/2002 - A reinterpretation and critique of the Society's recent interim accounts
By Colin Slater FCA, of Burgess Hodgson
05/12/2002 - Response to Charles Thompson
Thomson described EMAG as 'standing on the sidelines and criticising'. Paul Braithwaite's rebuttal, listing some of EMAG's activities on policyholders behalf.
05/12/2002 - EMAG press release
To accompany the reports of Colin Slater and Ned Cazalet, calling into question the FSA's role as regulator.
05/12/2002 - Ned Cazalet's study
'An evaluation of the financial position of the Equitable Life.'
04/12/2002 - EMAG press release
Last week, the committee of EMAG wrote to all non-execs to propose the immediate appointment of a full-time chairman (see below).
03/12/2002 - Equitable Life - Interim report for the half year ended 30 June 2002
EMAG Member and chartered accountant John A Newman has written a commentary in a personal capacity on the latest interim accounts.
29/11/2002 - Letter to Sir Howard Davies at the FSA
Prompting him to prick his conscience over FSA failings with regard to Equitable Life.
29/11/2002 - Letter to the Non-Executive Board Members of Equitable
EMAG letter to all non-executive Board directors suggesting the Chairman should be replaced immediately with a full time company doctor.
28/11/2002 - A paper by Bill Davies analysing the ramifications of the House of Lords
The views are personal to Mr Davies and do not reflect those of EMAG's committee.
27/11/2002 - Penrose questionnaire
We have now had an overwhelming response to our request for your help and we will be contacting those we wish to progress through EMAG during the first week of December. Thank you for participation. FYI - the number of hits on the EMAG site hit unprecedented levels in the last week - averaging 15,000 per day.
27/11/2002 - Letter from John Tiner of the FSA
In response to an urgent agenda submitted by "E 7", 22nd Nov '02.
27/11/2002 - EMAG committee meeting minutes
Held at the RAC club, London
27/11/2002 - Report on the Adjournment Debate in Parliament
Paul Braithwaite's account of the proceedings
27/11/2002 - A new Early Day Motion (EDM 206) on Equitable
Lodged by Tory front bench spokesperson Stephen O’Brien on Nov 28th. An excellent call to action to MPs which should be brought to your MPs attention. 54 signatories thus far.
24/11/2002 - EMAG advert
This ad recently appeared in The Times and The Sunday Telegraph. Why not print it off and display it on a notice board to spread the word?
22/11/2002 - Alex Henney's letter to Glenda Jackson MP
Regarding the Penrose enquiry and the failure of the Parliamentary Ombudsman
21/11/2002 - Alex Henney's letter in the Financial Times
"Labour's response has been lamentable."
20/11/2002 - E 7, all action group, letter (Nov 4th) to Parliamentary Ombudsman
Pleading for immediate broadening to the study of Treasury maladministration to go back a decade.
20/11/2002 - Letter to the Times from Paul Braithwaite
EMAG letter in The Times 20 Nov refuting the persisent excuse of the collapse of equities.
20/11/2002 - EMAG issues press release
Chairman calls on the FSA to convert fine words into action and force the Equitable to provide adequate information to its members
20/11/2002 - A hasty note from Paul Braithwaite, EMAG general secretary
EMAG has been inundated since the dire announcements of November 15th. We have every sympathy with the annuitants who had been led to believe that their cutbacks would be smoothed over many years, only to learn that the rug has been summarily pulled and they must now plan to live on between 20% and 30% less income, from next February.
Can we suggest that if you have strong feelings you should do something about them and at least write to your MP (and your newspaper) and encourage others to join EMAG?
The interim accounts, many weeks overdue, were finally circulated last weekend. An accountant on behalf of EMAG will prepare an evaluation, hopefully by November 27th.
However, the following is worthy of note:
- What we have received bears no resemblance to the template provided earlier this year by the FSA on the information that LifeCos should provide to policyholders. There is a pitifull paucity of salient information. For example, the size and financial performance of the constituents of the W P fund is not given. For 18 months we have not been told the number of members.
- There is no explanation of the composition of the tiny amount (£382 million) of residual capital (Funds for Future Appropriation).
- Provisions have risen by an alarming 30% in just six months to £850 million. Given that the with profits fund is reckoned to now be below £14.5 billions, down from £26 billion in 22 months, that is a very high proportion. The provisions are also subject to very extensive disclaimers from auditors and the board as to how difficult those provisions are to predict.
The Society has admitted that it may breach its technical solvency requirement and therefore default on the interest payments due next August on £346 millions of unsubordinated debt.
- The FSA has subsequently commented that whilst it would tolerate short term breaches, the Society would be expected to "put its house in order". In that situation one cannot rule out further reductions in non-guaranteed bonuses or indeed yet another rise in the MVA.
- Whilst the exposure to equities is now just 5%, there is not the degree of security one might suspect with 75% in gilts and bonds. Those instruments too are risk investments. Ned Cazalet describes the Society’s insulation to the market as the equivalent of a tee-shirt in a snow storm.
- Because of the strait-jacket of meeting the contractual GIRs on 75% of the funds there is simply no prospect of moving back into equities even if the market turns up so the growth prospects for the W P fund are gloomy.
Admin and overheads are continuing to run at unacceptably high levels with little prospect of reduced workload for the over-stretched Aylesbury staff.
In summary, there is no evidence that the Society has yet turned the corner and the prospect is merely one of covering contractual GIRs of 3.5%, at the expense of late-entrant non GIRs who will not benefit from guaranteed bonuses.
Several weeks ago EMAG commissioned the most respected analyst of Life Companies, Ned Cazalet, to prepare a truly independent evaluation of the Society's state. It will encompass the latest interim accounts and we expect to publish it on this website asap.
At this time the prime concern is for the welfare of the annuitants. EMAG will do its very best to make a political "stink" and demand action on this appalling proposal.
These are personal views expressed without the prior endorsement of the EMAG committee.
16/11/2002 - International news update - and a request for your help
EMAG continue to represent international policyholders in the fight for justice and compensation.
At the meeting between EMAG and the Penrose investigation team this month, Lord Penrose confirmed that the selling of Equitable Life Policies from offshore centres was part of his study. He also pointed out that he was also considering the issues of multiple jurisdiction in such countries as Germany.
EMAG will continue to press for an early completion date for this investigation and for the results to be made publicly available.
To ensure that the Penrose report reflected the reality of the plight of policyholders and did not become a 'sterile' accounting and legal document, EMAG agreed with Lord Penrose to supply case studies. We plan to supply two case studies from international policyholders to show the loss and sense of isolation felt by many international policyholders.
I therefore urge anyone who feels that their situation reflects the particular problems of international policyholders, to access the appropriate section in the EMAG homepage, and send us details. EMAG will then select cases that bring home the human reality of what has happened, and relay them to the Penrose investigation team.
The standstill agreement.
Internationals can still be included in the standstill agreements of the solicitors, Irwin Mitchell and Class Law. This agreement was set up in August 2002 to permit completion of the B&W Deloitte report and subsequent legal debate as to the case for compensation. International policyholders could access the sites of each of these solicitors to read up on what this standstill agreement involves and consider registering.
The FOS accepts complaints from Guernsey sold policies.
Since mid September 2002 the FOS has accepted that he has the jurisdiction to hear complaints concerning policies sold from the Guernsey office. (This decision is probably based on recognition of the active role played by the ELAS UK head office in selling and administering these policies).
Now is the time to put pen to paper and follow the complaints procedure of writing to the compliance officer at EL (if you have not already done so) and follow-up with a letter to the FOS in the same way as if you were a UK based policyholder. Details are held at the www.financial-ombudsman.org.uk web site.
The B&W Deloitte report
Irwin Mitchell have stated that they received a copy of the B & W Deloitte report early October, together with a copy of QCs counsel's opinion. They are studying the contents of the documents received and we expect them to express their views in support of the position of policyholders shortly.
The inclusion of international policies into UK legislation and compensation
EMAG is aware that some international policyholders are worried about the lack of rights to UK compensation should ELAS become insolvent.
While nothing in life is certain, "internationals" should be heartened by reading the reports on the success of the Irish and Spanish policyholders of Independent Insurance. These groups won their right to UK compensation through the European parliament's directives on equal treatment for Europeans when buying insurance products sold outside a member state.
The appropriate links are:-
As you will read in these reports, Stephen Alexander of Class Law states that there are similarities with the Equitable Life situation. The key point is apparently that both ELAS and Independent Insurance were selling insurance products, and not services, from the UK.
Our new web site and international access
EMAG is receiving a large number of web page "hits" from a wide range of countries. These include Australia, Belgium, Brunei Darussalam, Canada, Czech Republic, Finland, France, Germany, Greece, Indonesia, Ireland, Israel, Japan, New Zealand (Aotearoa), Poland, Portugal, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, Trinidad and Tobago, and the United States - so you are not alone!
We are considering the possibility of organising regional groups to collate and distribute information. If you are willing to help, could you send an e-mail to the international co-ordinator. Through these groups it is hoped to give a better response service to e-mails from international policyholders, plus to obtain co-ordinated feedback for the EMAG committee.
The above information is given on an "as is" basis and is not guaranteed to be accurate. It does not imply that EMAG is giving any advice to policyholders, who are always expected to seek professional guidance before acting.
15/11/2002 - Equitable issues consultation document
Consultation on ammendments to the constitution, responses requested by 16 December.
15/11/2002 - Equitable letter to members on reduction of with-profits annuities
See below in 'News in Brief' for links to the latest press articles
13/11/2002 - Result of our poll
Voting members of the With Profits fund were asked:
"A possible explanation of the very low turnout in voting within mutually owned life companies is the atomised ownership structure. Despite the dramatic events of the last three years within ELAS the AGM has typically produced only a 10% response. If votes were proportional to fund values, this might add impetus to exercising votes. Which do you favour? One member one vote OR Voting proportional to individual's fund value"
Seven out of ten members who responded, favour changing to voting proportional to individual's fund value to replace one member one vote, albeit based on a small sample.
12/11/2002 - Letter to John Tiner and Roger Allen of the FSA from Alex Henny
Letter from EMAG to FSA describing comprehensive failure of Society to provide members with necessary information (long document - may take some time to download)
31/10/2002 - Notes on Meeting between EMAG and the Penrose Inquiry
Paul Braithwaite and Leslie Seymour's account of the meeting
06/10/2002 - Follow up article on reaction to Sunday Times article on 29/09/02
"Whatever you say, say nothing, says Equitable Life" by Rory Godson
06/10/2002 - Teresa Hunter in the Sunday Herald writes:
It's your fault, guys: you should have saved Equitable. Also see Paul Braithwiate's posting on Motley Fool
01/10/2002 - FSA announcement
Regulations covering the insurance industry to be revised
30/09/2002 - Equitable Life to look at new compromise scheme
Equitable seeks to resolve outstanding GAR issues
29/09/2002 - Sunday Times article "On the edge"
Article causes furore and uncertainty increases
08/09/2002 - Procrastination is the thief of confidence
Article in The Obeserver on progress of the Penrose inquiry by Maria Scott, quoting Paul Braithwaite.
02/09/2002 - Paul Braithwaite's report on the Penrose Inquiry
The Penrose inquiry is finally preparing to hear witnesses. EMAG is preparing its evidence ...
20/08/2002 - Financial Ombudsman & former non-GARS
This item is of interest to former non-GARs who withdrew part but not all of their with-profits funds from Equitable Life before the Compromise Scheme.
EMAG Committee member Rodney Allen writes:
I am writing about Mis-selling Claims by non-GAR policyholders who held a policy covered by the Compromise Scheme, but who had withdrawn part of the funds held in it between July 2000 and January 11th 2002 which is the vesting date for the Scheme. I withdrew funds from part of a pension drawdown policy in February 2001. After the Compromise Scheme was passed, the Financial Ombudsman Service (FOS) advised any claims on my policy would not be eligible for consideration. I protested that I only wished to claim on the funds withdrawn, not on those remaining in the policy which I accepted were embargoed by the vote on the Compromise Scheme. A week ago I received a definitive decision that I was not eligible to make any claim. I was told no further represenatations would be considered. I have rejected the decision as it is clear that the Ombudsman has misread the Compromise Scheme document. I refer to page 37, Section 5.8. The affected rights refer to "funds" and not "policies" as in "However, the waiver of GAR-Related Claims will only apply in relation to the Scheme Policyholder's Policy Funds" (determined on 11 January 2002)
The Ombudsman quoted in his letter 4.1(c) Part II on page 150 to justify his decision. However, here again the word Fund is employed as qualifying policy.
I would be grateful if anyone suffering from a similar rejection would contact me - email@example.com.
I have pointed out to the Ombudsman that voting was by fund values and those who had withdrawn funds beforehand were not allowed to vote them. They cannot be bound by the Scheme. I hope he will find my arguments incontrovertible. Certainly, the FOS have withdrawn their decision not to consider any further representations on my claim. I am now awaiting their response.
09/08/2002 - Compensation nears for ex-nonGARs
The Financial Times reports today that Equitable has come to a "stop-the-clock" agreement with law firms Irwin Mitchell and Class Law, acting on behalf of former policyholders, including many internationals.
This is to allow Equitable to bring forward a compensation scheme based on a report commissioned by Equitable from B&W Delloite, and which will require approval from the FSA.
In the short term, the full cost of any such scheme will most likely fall on the non-annuitant remaining policyholders of the Equitable - who have already seen cuts of over 30% in their policies - full and fair punishment indeed!
03/08/2002 - Votes Denied Overseas
A member living overseas was perplexed at not receiving a voting form for the AGM. The reply JUST received from Equitable includes the explanation:
"Equitable Life made the decision on 1 May 2002 not to issue the Report and Accounts to non-members and generally not to issue voting forms to voting members outside of the United Kingdom."
It is good to know that the Chairman's expertise in governance is being so fruitfully applied.
29/07/2002 - FSA consultation paper - a move against financial engineering by Insurers
The FSA has produced a consultation paper arising out of remarks on the Baird report and following surveys. The first of many revisions and recantations by the FSA we hope.
20/07/2002 - EMAG restructures and refocuses on Government compensation for Equitable policyholders
Alex Henney is the new chairman of EMAG (Equitable Members' Action Group). After a year in that role, Paul Braithwaite will now become general secretary and Colin Slater FCA, deputy-chairman.
EMAG has changed its remit to focus primarily on the pursuit of Government compensation for ALL policyholders, present and past.
EMAG is currently conducting a recruitment campaign for new members and has already acquired a six figure fighting-fund with 5,000 new members .
Subsequent to EMAG's recent successful petition from 19,000 members*, EMAG is also engaged in preparing recommendations for a new constitution to replace the repressive governance of the Equitable Life that has so consistently thwarted policyholders' ability to exercise any influence, Said Alex Henney:
"The last year has been characterised by obfuscation, spin and mis-information. EMAG seeks transparency, to make our Society reveal more about our true financial state and greater accountability to members. Regrettably, there's little evidence that this board has got on top of the problems. Last summer we suggested unit-linking the fund and warned about the problem of the Guaranteed Investment Returns (GIRs). We were ignored. There is now no prospect of returning to being a With Profits fund. The fact that our chairman holds two dozen other directorships, including chairmanship of the troubled Channel 4, clearly hasn't helped. EMAG has the passion and energy to fight on and on for the beleaguered members."
In Paul Braithwaite's new role he will concentrate on trying to work with all the Equitable action groups to form a powerful funded force to conduct a professional long-term political lobbying campaign.
EMAG has asked Equitable again what it is going to do about acting against the regulator. Paul Braithwaite said:
"Equitable is the UK's Enron. The difference in treatment is telling. In the US they acted swiftly and thoroughly to seek out the truth. Here, 18 months after closure, there appears to have been collusion between the board and 'the establishment' - an astonishingly effective Sir Humphrey-type cover-up. If Equitable's board won't challenge mis-regulation, EMAG will. The Treasury must be made to realise that a million prudent investors feel aggrieved, with just cause. The Equitable is at the very heart of the pensions crisis. Until Gordon Brown shows that the Government will admit and address regulatory failure by the FSA and its predecessors there's little likelihood of restoration of confidence."
19/07/2002 - Sir Howard Davies speech on the Meaning of (Equitable) Life
Addressing the FSA's third annual meeting Sir Howard Davies said "Equitable Life remains a particularly difficult case, due to the finely balanced financial position the society has been in ever since the House of Lords judgement in the middle of 2000. "
05/07/2002 - SANDLER PRESCRIBES A NEW MODEL FOR WITH-PROFITS FUNDS
Ron Sandler acknowledges that he has himself suffered in the Equitable Life debacle. So it must be with feeling that he puts forward a textbook prescription for a cleanly organised new model long-term savings regime. There should be an end to commission with savings sales, a suite of CAT-standard pensions products and for with-profits funds a clear separation between policyholders funds, management charges and the smoothing account, which latter should be neutral in the long term.
One big hole in Sandler's idealistic view - governance. Since Equitable Life and others have shown that the preservation of a good name is not sufficient incentive to keep out of trouble, will the new clean structure come in too late to deal with crises? Another hole - how will the annuity business be interfaced with the with-profits fund? In the case of Equitable Life, the annuity business appears to have cost the policyholders dear as out-of-date mortality tables were retained, conveniently reducing liabilities. Will the conversion of capital to annuities be entirely separated from the with-profits business in the new Sandler model?
The new model is clearly the design of a brilliant technician, and a great improvement, but has it got enough nous in it to deal with the smoke and mirrors of the pensions business? With luck, we shall get a chance to see.
04/07/2002 - Society to leave equities altogether?
Charles Bellringer - the Society's chief financial officer - is reported in the Independent today as suggesting that the Society might sell all of its remaining equities apart from 3% (presumably unsaleable) of `potentially profitable' venture capital participation (perhaps this was worth rather more than 3% at one point?). Ned Cazalet is reported as commenting that this would terminate the possibility of the funds being a with-profits fund. How many will remember Charles Thomson at the policyholders meetings before the compromise as stating that his strategy was to re-open to new business as a with-profits fund insurer? Have we heard an apology or correction? Or do Bellringer and Thomson have unresolved opposing views?
01/07/2002 - A further 6% of policy values goes
According to the Society's announcement of 1st July the MVA rises to 20% and maturity values are made 10% below policy values. There is no statement about any effect on with-profits annuitants.
For the first time, it is impossible for the Equitable to claim that the cuts reflect falling share prices since now only 15% of the fund is in shares and only 29% was in shares at the end of 2001. The arithmetic shows that it wasn't true on earlier occasions and it certainly isn't the cause now. Nevertheless the Society states that despite having only 15% of the fund in shares recent market falls have significantly impacted the value of the fund. Recent falls even in the FTSE 100 could not account for more than 3-4% change in the fund so it must be the case that either the remaining shares are particularly volatile - in which case the previous investment policy should be re-examined for possible wrongdoing - or there must be significant other causes. Of course while everyone is assuming that the market indices are to blame, it may be that the fall in the dollar is the culprit. At one point earlier in the crisis EMAG did receive an indication that Equitable Life was active in New York markets - without further information even such irresponsible behaviour becomes a possibility. Since the bulk of the Society's bonds should be yielding around 5% (longer term gilt rates) so it is hard to see where these significant losses are coming from. It is true that the 3.5% guarantee possessed by around 75% by value of the policies is a liability but not a sufficient one. The Society cites the expenses of outsourced administration. Are the outsourced administrative expenses to be racked up to over £ 500 million (3% of the fund)? Or is there perhaps going to be a major payout to those that left as court cases proceed? Or have the Society been forced by the regulator to make further adjustment to their mortality tables, increasing our liabilities?
Financial analyst Ned Cazalet, writing in the Financial Times of 2nd July stated that insolvency was becoming highly likely. Stuart Bayliss on the BBC's moneybox programme on 1st July gave the opposite picture. The Board is soothing as ever. As ever the information given out does not justify the action. Where is the regulator in all this? Where are our elected representatives?
26/05/2002 - Rebasing is offered to Annuitants - but with misleading lack of clarity
Equitable have now put forward an offer to with-profits annuitants to allow them to change the `anticipated rate of bonus'. At present Equitable is asking for expressions of interest to see whether the offer would be viable.
Unfortunately a lack of clarity, either through carelessness or deliberate economy with the facts, may lead annuitants to overestimate their position.
The issue is this: When a 16% cut was made in capital values for non-annuitant policyholders on 16th July 2001, it was announced that with-profits annuitants would receive (in perpetuity) a bonus of 1.5% less than other policyholders instead of a sudden 16% cut in annuity. So for 2001 the interim rate of bonus offered to annuitants after this date was 4.5% instead of 6% and the actual bonus (announced on 15th April 2002), appears to be 2.5% instead of the 4% actual (which however non-annuitants got for only 6 months giving them only 2% over the year). So when 4% is proposed as the new `anticipated rate of bonus' for a with-profits rebasing the annuitant should remember that, as far as we can understand, the Society will have to make and declare a 5.5% bonus for him/her to get a 4% bonus; in other words there is a difference of 1.5% (although in any given year the figures can deviate slightly because each year's calculation includes correction of interim to actual bonus for parts of previous years).
It is hard to understand the attitude of those who have failed to make this clear in the letter sent to annuitants. Unless made clear in future it may well lead yet again to annuitants selecting unsustainable anticipated bonus rates.
25/05/2002 - Equitable AGM 2002 Yields Little New Information - Much Syrup
The Equitable AGM passed with little new information being given, but much soothing syrup being poured. Read our report for the few new facts given and the result of the poll. Also read
- the letter from Alex Henney of EMAG's Committee to Vanni Treves asking for proper answers to the factual questions and concerns raised at the AGM.
- A nugatory reply from Equitable.
- Our further note to Vanni Treves
- Our related note to Equitable Director Ron Bullen whose period as EPHAG chair and own declarations should lead us to expect understanding for the policyholder's and annuitants position.
- Related note to Charles Bellringer.
It is pretty clear that without the Chairman's proxy votes cast against them the independent candidates would have been elected and many of the Board directors not re-elected. If you prefer more syrup than information you may appreciate the anodyne report given on the Equitable Life web site.
One thing that was plain was that the Board's policy was to try and rebuild the with-profits fund from the present position. As Jeremy Lever QC has pointed out, this is much the same as trying to build a new with-profits fund from scratch - no one in their right mind would try to do it. A smoothing fund has to be built up again starting from zero. The difference is that in Equitable Life there are a large number of captive with-profits annuitants to squeeze. With the continuing fall in stock markets (still 25% of Equitable holdings) it looks as if further cuts in policy values may be coming.
Another feature of this AGM as last year was the attempt to delay bad news until after the AGM. In this case it partly failed - the efforts of Andrew Bolger of the FT brought the technical solvency return to light and to public attention just before the AGM. However the rebasing offer to annuitants - which means a very significant cut in annuities if they are to readjust to feasible future bonus rates - was delayed until after the AGM.
Read independent Board candidate Adrian Howard-Jones' speech draft for the Equitable AGM.
24/05/2002 - Solvency Return for 2001 Revealed - Margin is Thin
The FT today confirms the suspicions expressed here before - that the Society has tried to repress bad news in the full solvency return until after voting is complete and, preferably, until AFTER Monday's AGM.
But Andrew Bolger of the FT has finally brought out the truth.
Explanations that we had heard up to yesterday for non-disemmination included, that the digitised return to the FSA was coded, that the file was too large to put on the website, that the FSA needed to "stress test" it, that it was with companies house and that the delay was there.
The FSA did very little to help AGs to compel this statutory return into public domain. One wonders why?
Finally, yesterday, Andrew Bolger went to companies house and paid for a xerox copy. Only on his return did he realise that the copy lodged there is very far from complete.
It appears that yesterday afternoon he shamed our Society into finally capitulating and providing a FULL copy - which could, of course, have been done at any time after filing on April 30th.
This appears to vindicate Annie Shaw's aspersion in the Sunday Telegraph that the Society was deliberately repressing the solvency return until after the AGM.
Now we learn that 500 millions of "future profits" (can be averaged over the past five years) was, even in 2001, still the device to satisfy FSA solvency attaining a ``margin'' of 556 millions - leaving just 66 millions in "real" money as the true margin.
HOW can we, a closed Society that has seen the value of our W P fund decline in value in the explicit year in question from 25.8 billions to 18.6 billions POSSIBLY discount our so-called future profits?
EMAG chair Paul Briathwaite has personally written four times to the Society since April 30th trying to obtain this solvency return, at first on behalf of Prof Blake. We should all be grateful to Andrew Bolger for his perspicacity.
10/05/2002 - Prof David Blake reports on Equitable's financial position
Prof David Blake, Director of the University of London Pensions Institute, has been asked by EMAG to review the Report and Accounts for 2001 and to revisit the Compromise Scheme information in the light of the newly announced information. Read his report (Acrobat reader required).
Among Prof. Blake's conclusions - ``The Equitable Life with-profits fund appears to be close to technical insolvency'' - ``With-profits policies with their lack of transparency are now widely discredited'' - ''they have failed to understand the risks underlying guaranteed minimum annual bonuses or GIRs''.
07/05/2002 - EMAG Launches Large Scale Recruitment Drive
EMAG is undertaking a massive recruitment drive among members and former members of Equitable Life. Our aim is to enable EMAG to campaign effectively for compensation for current and former Equitable Life members. The extensive mailing is made possible by advertising support from Accountants Financial Planning Group who have developed tailored services and selected specialised products for Equitable Life members. The content of our mailing is available here as a PDF file (use Acrobat viewer at least level 4)). For enquiries the Helpline number is 0800 279 9104.
Read EMAG committee member Colin Slater's first thoughts about the results so far.
01/05/2002 - Rectification Scheme for ex-GARs
We understand that Equitable has send out offers to those who took benefits from GAR policies since 1994 (?) in a manner ruled unlawful by the House of Lords. However, some correspondents have found the documents baffling and have even raised the possibility that the proforma for DECLINING the offer contains a clerical error as it appeared to them illogical. This matter has been raised with Equitable; we will report their response as soon as possible.
You may wish to read the opinions of an EMAG member who has looked carefully into his own case.
In the meantime anyone faced with the forms and uncertain as to the meaning of the declarations they are asked to sign should take advice about the rights that are being signed away.
24/04/2002 - Equitable to Sue 15 Former Directors as well as Auditors
To its earlier announcement that it would sue former auditors Ernst and Young, Equitable has now added the news that it will begin legal action against 15 former directors - all those holding office back to 1994 except for Jonathan Dawson. The damages sought will be of the same order or greater, a figure of £ 3 billion is mentioned.
"The Society's case is that the former directors failed to recognise that there was a serious legal question on which advice should have been sought, namely as to whether the differential bonus policy was permissible Subsequently, once this issue had been raised in a legal challenge, the directors failed to act appropriately on advice from their legal advisers that there was the possibility that the legal test case might not succeed, and failed to ensure that proper financial provision was made. This failure set the Society on a path that led to the failure to find a buyer, its closure to new business, the eventual purchase of its operating assets, apart from its with-profits fund, by the Halifax and the need to establish the recently successful compromise scheme."
15/04/2002 - Another Chop out of Policyholders' Funds
Equitable Life today issues a press release with the following shocking news:
- Bonus for the year 2001 is reduced from 3% non-guaranteed (ie 6% for six months) to 2% non-guaranteed (4% for six months)
- Policyholders taking contractual benefits lose 4% of `policy value' unless this takes them below guaranteed value
- Individual leavers now lose 14% as MVA
- is no mention of effect on annuitants so there may be none (except for with-profits annuitants via the bonus rate)
- The Society is increasing provision against potential claims beyond those made in the interim 30 June 2001 accounts (details will be in Annual report and Accounts).
- No legal action is to be taken against the Society's former legal advisers.
- Legal action has started against Ernst and Young the former auditors.
- The balance of the provision for GAR-related claims as in 30 June 2001 accounts will be used to meet costs of compensating non-GAR ex-policyholders.
The Board must now explain how they have turned a 2% capital loss (6% drop of FTSE100 on one third of fund holdings in equities since July) with presumably 2% dividend income over the year into a 4% loss.
Ex-non-GAR policy holders will not be too happy to have had a 2.5% uplift, (less for those with GIRs), a 2% bonus and a 4% cut in fairly rapid succession, nor ex-GARs to have their 17.5% uplifts reduced. It is noteworthy that policyholders will only get their policy statements in June i.e. after the AGM.
On the positive side Ron Bullen, chair of the EPHAG members action group has been named as a non-executive Director and will be up for confirmation at the AGM. While Ron will have to observe discretion in his public utterances, we can hope that having an experienced campaigner for policyholders on the Board will finally get through to the Board the sense of betrayal of policyholders. Ron - we are expecting you to look hard at how our money is being managed - let's make sure the rest of the bad news comes out in the next few weeks for starters - we expect nothing less of you.
22/03/2002 - Halifax Agreement Details Still Refused
Despite having been offered the details of the Agreement in February 2002, EMAG has still not received them. Only heads of agreement have been made available so far. It is naturally a matter for concern when the Halifax £ 250 million was declared to be subject to an unpublished condition of the agreement that the compromise scheme be agreed 31st March 2002.
Read committee member Alex Henney's letter to John Tiner at the FSA and another on this drawn-out failure to deliver what was offered and what Andrew Bolger had to say in FT 23 January 2022 about it .
22/03/2002 - EQUITABLE Proposes Approach to GAR-Related Claims from Ex-Members
It is well known to criminologists that much violence takes place amongst friends and family but it will be a surprise to some non-GAR members of what they had thought was a mutual society that those who left and have preserved their claims are to be more carefully treated than those who got out.
Members will remember that GAR-related claims of mis-selling were lightly valued and written down in the Compromise Scheme with a poor chance of success in Court. Now Equitable has announced a rather careful procedure for evaluating such claims from those who have preserved them by leaving before the Compromise judgement.
Read Equitable's announcement on dealing with GAR related claims
20/03/2002 - Governance - Is Mutuality Effective?
During the recent crisis at Equitable Life members may be forgiven for having believed at times that the Board was more concerned about the staff and the Government than about the members.
Much of the trouble arose from the ineffectiveness of mechanisms of governance supposed to protect policyholders. Elections in mutuals are often a sham intended to perpetuate the tenure of the existing Board. Read EMAG's plea to Sir Howard Davies and to John Tiner, Head of Insurance, at the FSA to make a change to this failing system and breathe life back into mutuality.
14/03/2002 - Equitable Life Action Groups Meet to Start the Campaign for Compensation
Representatives of: EMAG, ELMHG, ELJAG, ELGAAG, EPHAG met on 13th March 2002 to discuss common action in favour of compensation of Equitable Life members after the failures in regulation led to such significant losses. A short press release gives a summary of the lines of action agreed. See also an opinion on regulation and what brought down the Society.
01/03/2002 - FSA Paper on With-Profits Governance and Appointed Actuary
The FSA has put out the final paper of its with-profits review for consultation. See the with-profits review page at FSA for the other papers.
In the case of the Equitable Life, where the Appointed Actuary has often been an active director, and has later succeeded as Managing Director, the examination of conflicts of interest is clearly pertinent.
The facts of recent history are that the present MD, Charles Thomson, was Appointed Actuary from December 2000 to the May 2001 AGM. The INDEPENDENT ACTUARY, writing in the Compromise Scheme documents states that the assets were about 10% below policy values at December 2000. However, no action was taken until 16 July 2001, well after the AGM, when the 16% cuts were brought in. EMAG estimates that about £ 200 million extra was paid out to policyholders who left the fund in that period as a result of the delay in bringing assets and policy values into line. Each policyholder will want to consider for themselves the balance of benefit from this particular aspect of recent Equitable history.
01/03/2002 - Parliamentary Early Day Motion to Galvanise Parliamentary Ombudsman
Despite great efforts by members and their MPs the Parliamentary Ombudsman has limited his inquiry into misregulation of the Equitable to the period of the Baird report only.
Now Roy Beggs MP has put down an Early Day Motion (EDM 910):
"That this House calls upon the Parliamentary Ombudsman to initiate an immediate independent inquiry into the Equitable Life affair and the gross dereliction of duty of the regulators appointed by the Government to monitor Equitable Life policies."
Equitable Life Members Group have set up a list of MPs who have been contacted (latest notified total 303 MPs) and also those who have signed the EDM so far (currently 147).
Roy Beggs MP raised the EDM at Business Questions on Thursday 21st March - the following exchange took place:
Mr Roy Beggs MP:
The motion has now attracted 147 signatures from Members on both sides of the House. Will the Leader of the House use his influence to persuade the parliamentary ombudsman to address the issue, to give us an independent inquiry and to achieve a satisfactory conclusion for more than 1 million policy holders, past and present, who believe that they have been disadvantaged?
Rt Hon Robin Cook MP:
I congratulate the hon. Gentleman on having pursued an issue of immense and real concern to thousands of United Kingdom citizens. It is an important principle that the ombudsman is independent of Government and not subject to pressure from Ministers, but the hon. Gentleman will be aware that the ombudsman has the matter before him. He has, sensibly, concluded that it would not be proper for him to take action pending the outcome of the inquiry by Penrose, which has already been appointed by the Government, but I am sure that he will return to the matter and consider what action he can take once we have received the report.
Mr Christopher Chope MP has also raised EDM 1053 on this subject thereby apparently making it a partisan matter, but has not yet made the text available. Comment in Observer, 17 March 2002.
08/02/2002 - Court Approves Compromise Scheme
Hon. Mr Justice Lloyd today approved the Equitable GAR-related Compromise Scheme. According to Reuters he said, "I have no doubt it is a scheme such as an intelligent and honest man ... might reasonably approve" and further "The fact that such large numbers and majorities .. did approve it is a major factor in this." His judgement can now be downloaded for you scrutiny. A week had been reserved for hearings on the Scheme before Hon. Mr. Justice Lloyd.
The hearings opened on the 4th February with a 90 minute exposition on the content of the 31 witness statements and the report by Prof Blake by Gabriel Moss QC for the Society. Witnesses who were no longer policyholders could not be heard - among them Mr. David Stonebanks. Mr Nicholas Bellord and Mr Rodney Allen (EMAG committee member) were heard also actuary (ex-EPHAG committee member) John McLeod.
29/01/2002 - A Better Equitable Life
Read our note to John Tiner at FSA on governance and an account of how transparency is more honoured in the breach than the observance by Equitable and its solicitors. In the interests of better governance we ask "should Charles Thomson receive a salary bonus for his performance last year?" Many policy holders are having to say farewell to the Equitable and without any final bonus - should the Chief Executive be doing the same?
28/01/2002 - Compromise Scheme Massively Endorsed
According to Reuters today the Equitable Life Compromise Scheme has been endorsed by overwhelming majorities of the votes counted. Of the GAR policyholders 97.3%, holding 98.1% of the GAR policies voted YES. Of the non-GARs 99% voted YES.
We understand that of the total votes (GARs and nonGARs) that voted the numbers were - YES 224,501 - NO 3,748. This overwhelming endorsement gives the best possible chance for the scheme to clear the Court hearing and come into effect in short order. Undoubtedly there will be principled objections at the Court hearing - there can be little doubt that the Scheme is pretty rough justice for some - but the electorate has cast its vote firmly for rough justice rather than uncertainty.
20/01/2002 - Vote NO and Make a Quick Exit
We have heard that applicants to transfer out who intended to vote NO and wished to take legal action against the Society have been transferred out in as little as 3 days. If so it must mean that the vote is very close - those who leave before the declaration need not be counted.
20/01/2002 - Sunday Telegraph Starts Campaign
Liz Dolan, writing in the Sunday Telegraph announced the start of a campaign to look into the origins and outcomes of the Equitable Scandal. "We will not let matters rest. We plan to run a series of articles over coming weeks taking a closer look at what went wrong and how disaster might have been prevented.'' Bravo to that!
11/01/2002 - Votes, Speeches & Questions at Class Meetings
The GAR and the two non-GAR class meetings took place at Wembley on Friday 11th of January 2002. Vanni Treves announced that group pension schemes had indicated that they were voting in favour of the compromise, following advice from the National Association of Pension Funds. He also indicated that the costs of preparing and carrying through the scheme proposal and related activities would amount to £ 30 million, mostly in legal fees. He admitted that the Society would face legal suits from ex-members but stated that no provision had been made for compensation of ex-members. In answer to questions Charles Thomson admitted that members leaving between January and 16th July 2001 had been taking 16% more than their asset share.
EMAG chair Paul Braithwaite, questioned the huge expenditure on the scheme, the £ 275,000 bonus to be paid to Chief Executive Charles Thomson (packaged with the Scheme Proposals) in the light of the huge exodus from the fund and the dreadful service offered to members during the year.
Read Paul Braithwaite's account of the Gar meeting and his question of Vanni Treves. Read also Nicholas Bellord's account of the non-GAR meetings
05/01/2002 - Compensation for missold PIP
A member has informed us that they received compensation after vigorous protests of misselling of a PIP sold when the HoL case was already commenced. The Equitable rep had made written notes that the policy was needed for only 2-3 years while the PIP guarantees apparently only come into effect after 10 years. A refund of the July value cuts and MVA together with growth at 8% was received.