13/12/2007 - The PRU deal consumated
On 28th November the High Court held a hearing to ratify the disposal of the 56,000 with-profits annuitants to the PRU on Dec 31st 2007. Present were Vanni Treves, Charles Thomson and Neill Fagan (the solicitor partner at Lovells, the Society’s inbound litigation lawyers). Both EMAG’s chairman, John Newman, and Markus Weyer from DAGEV (the German policyholder group) made verbal presentations. Read EMAG’s affidavit to Court, which concerns the inadequacies in the role played by the FSA. Read John Newman and Paul Braithwaite’s accounts of their day in Court 16.
Few annuitants seem to realise that for payments to not be further devalued will require the PRU to make annual bonus declaration of 11% or more. Further, to switch to the £1.8 bn fund being invested 70% in equities come January may prove to be frying pan to fire if the FTSE 100 takes a tumble, as many expect in 2008.
13/12/2007 - PO 2 delayed until summer 2008
All MPs received a letter from Ann Abraham, The Parliamentary Ombudsman, on 10th December promising only a further update in late April. The hoped for timetable is to publish before the Commons summer recess. Thus far, the Treasury has succeeded in making this much-anticipated life-line two years late. The regulators are, effectively, being given yet another Maxwellisation opportunity. We’ve learned not to believe the PO’s projections on timing. Read Abraham’s letter to MPs. See EMAG’s Press release. Read press coverage to the news of the delay.
09/11/2007 - Treasury still stalling
A new letter has recently been sent to an EMAG member in response to questioning the unfair comparative treatment of Northern Rock. by Treasury Minister Kitty Ussher to Tory MP Adam Afriyie. It does give us a new insight into where the Treasury is coming from: One wonders how long the Brussels Parliament will put up with the UK Government’s intransigence. Click here to read the letter.
19/10/2007 - Clarification from the Pru
On 12th October, the Pru wrote to EMAG and included the following clarification:
“……There will be no option to convert to a conventional annuity or any other asset backed annuity. We are sorry if you are disappointed with the terms that have been agreed between ourselves and Equitable Life regarding the proposed transfer to us.
Whilst we fully appreciate both your and your members’ concerns we hope that you would consider the transfer to Prudential as a positive move.
As an aside, it has been brought to our attention that EMAG's website carries an article from Paul Farrow quoting you as saying "The new Prudential fund has no smoothing kitty from elsewhere or in it already."
This appears to be a misunderstanding of the operation of the Scheme. The surplus assets in Prudential's WPSF will be used to support smoothing for the transferring policies, as they are for Prudential's other with-profits business……”
EMAG is happy to print this correct of the Sunday Telegraph.
Many members have been concerned that they might lose Government compensation after any move to the Pru. Liz Dolan in the Sunday Telegraph explained to readers:
“….according to Paul Braithwaite of EMAG, the lead complainant in the Equitable case, there should be no question of former members being left out of any compensation package. "The Government has a duty to mitigate the losses it has caused, and no-one should be punished for leaving," he says. "We’ve made this clear to the PO from day one and there’s no reason to suspect she will say anything else."
19/10/2007 - The still abysmal FSA
On 11th October four EMAG directors, with our lawyers from Bindmans, met the FSA’s entire Equitable Life supervisory team for 75 minutes on the subject of the Pru deal. It was no more progressive than any of our earlier meetings and we can report that “light touch” is alive and well and continuing to be the operational mantra of our financial regulators. The meeting was on the record but EMAG has agreed to obtain approval prior to publishing the full minutes, which will follow.
Meanwhile, here is the FSA approved short note on the meeting’s content:
“1.Since 20th June EMAG had been calling for CONVERTIBILITY for WPAs i.e. that they could make the choice of a level or fixed annuity, having had four years of a WPA which has declined in value. The FSA said that they had approached the Equitable about this, but had been told that there was “no call for it”. EMAG requested ernestly that the FSA discuss this as a priority immediately with the PRU.
The FSA has said it will raise this with the PRU's supervisors, but noted that the costs of conversion could be high for individual policyholders.
2. EMAG asked that the FSA’s report expressing its view on the fairness of the transaction, should be published BEFORE the EGM on 26th October.
The FSA said that it would be considering carefully and fully the fairness of the transaction for all policyholders and could not, therefore, give an undertaking in this respect. The FSA indicated that, while the deadline set by the Court i.e. 21st November had to be met, it was aiming to have the report ready some time before this, but could not give EMAG a firm date now.
3. EMAG called again for publication the terms of the engagement, including indemnities, of the Independent Expert and asked that the rules set by the FSA should be expanded to require transparency. This is a matter of grave public concern since independence had to be shown.
The FSA took the view that this is a matter of commercial confidentiality and could not be made public without the consent of the parties to the contract. The FSA had no objection to disclosure, if the parties were willing. The FSA pointed out that the IE had to meet professional standards as an actuary.
4. EMAG asked the FSA to approach the Equitable to provide a post-analysis of the voting in order to show:
i the votes cast by the WPAs and also the value of the policies casting, each way
ii the votes cast similarly by the non-WPAs
iii late votes delayed by postal inaction
iv the votes cast at the Chairman's discretion separated from the mandated-by-member votes
The FSA undertook to consider making an approach the Equitable.
5. EMAG criticised the adequacy of the data on the historical performance of the PRU and the sub-fund and requested that the PRU should be asked to make further information available, particularly with regard to the operation of smoothing – giving examples of how it would operate if the FTSE were to fall by, say, 20% in the first two years.
The FSA would consider EMAG’s views, but gave no undertaking to request the publication of further information.”
12/10/2007 - Court of Appeal decision on the OPs – when?
Three days in the Court of Appeal hearing the case on July 25/26 and 27th and then absolutely nothing. It seems extraordinary that it will be three months before we can read the outcome which has such bearing on how PO 2 will be received by Government. That said, the arogance of Government has been shaken to its foundations in the last week and that must surely bode well?
12/10/2007 - Pressure on the FSA
EMAG has been negotiating for MONTHS with the FSA to seek that the Pru proposal is FAIR. To this end, EMAG’s chairman John Newman wrote to the then head of the FSA’s Retail Firms Division on 20th June, Ian Tower. Unfortunately, Mr Tower departed to Washington DC. There is now a 100% new FSA team supervising Equitable Life. Read the June 20th letter and note in particular paras 7, 8 and 9
You will be aware that this timely letter from EMAG had no impact on the written word that appeared in the final documentation publication - a very suspicious two weeks after its face date of 14th September.
EMAG demanded an immediate high level meeting with the FSA’s supervisory team and we were finally granted that opportunity on Thursday 11th October. Three EMAG director and our lawyers Bindman & Partners accompanied John Newman. The meeting was on the record (and recorded), but EMAG has agreed to clear the minutes, which will be published here. Suffice to say that EMAG made several constructive 11th hour improvement suggestions which the FSA is considering.
12/10/2007 - An evaluation of the Pru deal
On Tuesday 9th October EMAG e-mailed thousands of its members with an independent evaluation of the Pru proposal, commissioned from Chartered Accountants Burgess Hodgson. It is apparent that many members’ servers filtered out the report as bulk or worse! The EMAG board has therefore decided to make this valuable and helpful independent assessment available immediately and free to all.
01/10/2007 - FSA to be quizzed
On Tuesday October 9th the usually toothless Treasury Select Committee will interrogate the FSA – its chairman Callum McCarthy and its new chief executive Hector Sants- about the FSA’s abysmal role in the run on Northern Rock and the FSA’s failure to spot an oncoming freight train.
01/10/2007 - Vanni Treves’ volte face
To coincide with the publication of the Pru offer papers, Vanni Treves appeared on BBC TV’s “Working Lunch” on Friday 28th September. Anybody watching who has not followed matters Equitable would have been given the impression that Mr Treves has for six years been fighting Government for compensation, when the reverse is the case. Mr Treves has consistently resisted holding the Government to account and Charles Thompson discouraged the EU Parliament from investigating. See “Working Lunch” here.
01/10/2007 - Details of the Pru deal
The press coverage lacked substance, with the exception of Paul Farrow in the Sunday Telegraph. Read a cross-section of the press.
24/09/2007 - Treasury Select Committee
On 20th September the Governor of the Bank of England appeared before the committee and he gave a sterling performance. He displayed an integrity woefully lacking of late in public life and it would be a travesty if he was to become a victim to the Northern Rock run. Blame lies in two places: Gordon Brown, who divested the B o E of supervision of banking companies in 1997 when he set up the so-called “tripartate” regulatory regime (Treasury, B o E, FSA). It doesn’t work when stress tested. But we knew that. And the major culpability lies with the FSA who are responsible for assessing risk and overseeing individual companies. They were asleep at the wheel. Just as they were with Equitable Life. The FSA’s chairman and chief executive will be quizzed by TreasCom on Tue 9th October. Let’s hope the MPs are better prepared.
24/09/2007 - Northern Rock
Where to begin? It’s been such a helter-skelter two weeks. Hundreds of articles have been written, dozens of them have related the loss of confidence and lack of trust directly back to Equitable Life. This must help our cause. Interestingly, the Government’s mean resistance of the claims of Occupational Pensioners in failed schemes has begun to crumble. See Daily Telegraph 22nd September.
Of course, this is in the wake of Northen Rock and reflecting the possibility of a snap general election being called. See a small cross-section of Northern Rock coverage
23/08/2007 - EMAG protests about EQUI
On 21st August EMAG’s Paul Braithwaite, along with EQUI rapporteur Diana Wallis MEP and Dr Vincent Cable MP hand delivered to the Treasury a letter to the new Chancellor, Alistair Darling, appealing for him to intercede, break the six year logjam and make an official response to the EQUI report. Read EMAG’s letter.
The press covered the event. Interestingly, the Treasury confirmed to the Telegraph and FT that it does still intend to wait on the PO and the PO confirmed that PO 2 will not now see the light of day this year. Read the press coverage.
EMAG made clear in its letter and release that the EQUI report overlaps only marginally with the PO, who has no remit over European Law or the Single Market. What a breathtaking fudge and how totally contemptuous of the European Parliament! Read EMAG’s press release.
18/07/2007 - Another Equitable stitch up
Recently, Equitable revealed that they have underpaid out 3,000 policies with regard their contractual entitlement and have written to the individuals. Despite this being a contractual entitlement, the letter seeks a signed declaration waiving away:
" ... claims alleging breach of s.62 of the Financial services Act 1986, misrepresentations ... and breach of contract or warranty and/or any form of estoppel, whether any such claim is based on alleged negligence or fraud or otherwise and whether for damages, rescission and/or any other remedy whatsoever, whether known or unknown to me at the present date."
This is yet more bully-boy tactics, brought to light first by Teresa Hunter in Scotland on Sunday. But she quoted the FOS saying:
Emma Parker, a spokeswoman for the Financial Ombudsman Service, said "full and final settlement" clauses were standard and should only relate to the issue being resolved, not other disputes which might arise.”
So, you have been warned. Don’t sign away your rights.
18/07/2007 - What’s the FOS for?
Lord Neill’s damning report into the FOS’s behaviour was starved of the oxygen of any response other than a muddying of the water by the FOS. TreasCom steadfastly refused to investigate further. – thanks to John McFall. Subsequently, the FOS has commissioned a broad-ranging quantitative research study which could be paraphrased as asking “Weren’t you pleased with the FOS’s result on your behalf?”. This misses the point: Lord Neill investigated qualitatively and in depth three dozen cases of only Equitable Life complainants. As a direct result of Lord Neill’s submission, EQUI recommends that the FOS should be made totally independent of both the FSA and Government - because it appeared the the FOS had been influenced.
But the climate looking forward seems to heading in the opposite direction: The industry clamours to have the FOS emasculated. John Tiner’s new proposed reforms for a Principles Based Regime (PBR) calls for the FOS to move towards being a formal High Court, setting case law. This is totally contrary to the raison d’etre of the FOS to be a free voluntary adjudication service (VAS), concerned with administering “Natural Justice” and NOT subject to formal, expensive legal hurdles of proof. See a recent article by Citywire.
18/07/2007 - Actuaries severely reprimand chief executive Charles Thomson
It transpires that The Faculty of Actuaries found Charles Thomson guilty of bringing the profession into disrepute months ago, in February but only published the finding in mid-July. This was the subject of a blistering lengthy attack on Thomson by the Mail on Sunday’s Jeff Prestridge on July 14th, which reported that IFAs believe he should go. Simon Bain in The Herald was first with the story and he reported Charles Thomson as brushing off the news saying: “….as a disciplinary matter it was "completely trivial", and that "it is actually quite hard to prove you are innocent". Well, yes, it would be hard to prove yourself innocent when it was evidenced in writing and revealed under oath in Court 76.
Arguably, new grounds for bringing the profession into disrepute? Alarming, to say the least, to think that this is the man who is negotiating the sale of the W P annuities to the Pru. Read both articles.
18/07/2007 - The FSA
The annual meeting of the FSA is to be held on 19th July. As usual, EMAG directors will be present and have already lodged in advance questions about Equitable.
EMAG is extremely concerned at departures of all FSA staff who have regulated Equitable in the period of the PO’s remit, which, regrettably, ended at 1st December 2001 when the FSA became (laughably) self-policing. The list comprises: Sir Howard Davies, Michael Foot, Martin Roberts, John Tiner and, most recently, Ian Tower. This leads perhaps to a predictable response to PO 2, should it be critical, that “We do things differently now. Lessons have been learned. In any case, all of those involved have left the FSA.” John Tiner’s replacement is another poacher-turned-gamekeeper, Hector Sands. He was chief executive of Credit Suisse before joining the FSA three years ago. Read about him, as reported by Money Marketing.
29/05/2007 - PO 2 delayed for 3rd time
It’s hard to believe, but the Government’s response after three months of Maxwellisation ran to 550 pages of new arguments (delivered on 20th April), both legal and actuarial. This, unfortunately, caused the PO team to need to rethink and appraise. We’ve been here before, in January 2006. And then again, in the late summer of 2006, when the FSA found “a van load” of new materials previously undisclosed to Lord Penrose.
It’s now three years since it was instigated (and holding). Sad to say, Ms Abraham cannot now make ANY prediction as to when her report will be published. It is extremely frustrating for EMAG, as a progenitor of the investigation, that we have no idea about the nature of the Government’s new representations and we are currently totally in the dark. Read Ann Abraham’s letter to MPs. See the extensive extremely cynical national press coverage.
29/03/2007 - Report on the Equitable’s AGM 24th May
Paul Braithwaite attended his ninth successive ELAS AGM on EMAG members’ behalf. A great deal of the time was taken talking up the prospective PRU deal. Actually, an undertaking that admin costs for the WPAs would be NO HIGHER than current levels may write in stone a hefty profit for the PRU's shareholders, since the current ELAS admin costs from Clerical Medical contract (due to expire in 2011) are believed to be inordinately high.
Paul Braithwaite raised a question that raises important issues about the sale of assets to the PRU.
Jeff Prestridge of The Mail on Sunday was clearly impressed but has no doubt that the remainder of Equitable should be sold: Read More.
26/03/2007 - Treasury concedes over OPs
With a fanfare on Budget Day, Gordon Brown announced an extra £6 billion injection to the Financial Assistance Scheme (FAS), specifically to address failed the pensions in failed Occupational Pension. However, Dr Ros Altmann subsequently pointed out many unsatisfactory deficiencies in the small print, including amongst others:
"It still only pays from age 65, but those who should have retired at age 60 lose 5 whole years of pension. It still EXcludes solvent employer scheme members. It still pays no inflation linking. No tax free lump sums. Widows benefits FAR less than scheme benefits etc”
It seems to be the case with both Gordon Brown and Vanni Treves that the devil is always in the detail! Nevertheless, this is a development that is encouraging for Equitable Life victims.
19/03/2007 - DWP fight on against OP victims
It was announced on 15th March that the DWP has decided it will take on up to the Court of Appeal the ruling by Bean J. that a finding of maladministration by the Parliamentary Ombudsman cannot be refuted by government.
The Occupational Pension victims had offered to fast track this directly to the House of Lords, as the government clearly wants to overturn this ruling, but the DWP has decided to “take the long road”, albeit bearing both sides legal costs. Which means potentially months if not years more wrangling and uncertainty. All too typical of this morally bankrupt Government. Click here to read more.
19/03/2007 - Charles Thomson pay
The remuneration package for Equitable’s chief executive is once again and justifiably under fire from the Mail on Sunday’s Jeff Prestridge. This is the actuary who was central to the Society’s abortive legal pursuits that wasted four years and £50 millions that members could ill-afford and he was ridiculed on the stand in the High Court. Yet Prestridge anticipates yet another inappropriate bonus for a man who is now presiding over but a dozen staff, with no investment flexibility and is now a third the size it was when he took office.
19/03/2007 - The PRU as White Knight?
On 15th March, along with its annual results, the Prudential announced a prospective take-over of the with profits annuities of 50,000 Equitable members. The prospect for those annuities would be to return them to participation in equities and move them after many unstable years to safe haven. Despite their having been assured in 2001 that they would be protected, the board subsequently announced in a volte face in November 2002 that this group would be made to suffer cuts. In the last four years, many have had annual income reduced by 40%.
The agreement is predicated on an EGM to be held in the Autumn and it will need to be approved by members and the FSA. As always with such seemingly wonderful new developments from Equitable, the devil will be in the detail. It has not yet be revealed what incentive, if any, there is for the remaining 250,000 members to agree to the departure. See the official press release.
12/03/2007 - Institute of Actuaries come clean
On 2nd March the Institute published a damning report into the way three of its own had systematically failed investors in Equitable Life. Read the Summary or download the whole report from here.
Read the extensive press coverage.
12/03/2007 - EMAG briefs MPs
EMAG has written again to all 646 MPs on 26th February to provide the 2005 intake of new members with a simple summary briefing papers and the others with a refresher and update. Read EMAG’s summary. You may wish to download and print it off as an aide memoire to any discussion you may have with your own MP. Click here to download.
12/03/2007 - Dr Tony Wright’s EDM 969
Post the DWP’s defeat in the High Court, Tony Wright (Labour) chair of the select committee on Public Administration tabled a new Early Day Motion which was co-sponsored by all parties. Thus far, only 128 MPs have signed. Interestingly, more Lib Dems (41) and more Tories (43) have signed than Labour MPs (37). Check whether yours is one of them here.
If not, why not use: www.writetothem.com to urge support for honouring recommendations of the office of the PO and supporting the occupational pension victims. The motion reads:
“That this House notes the High Court judgement that the Secretary of State for Work and Pensions was wrong to reject the Parliamentary Ombudsman's findings of maladministration in her report on occupational pensions; welcomes the Government's intention to review the Financial Assistance Scheme in light of the European Court of Justice judgement; and urges the Government to move quickly to achieve an all party consensus around the provision of a fair and sustainable level of support to those who have lost all or part of their pension.”
02/03/2007 - The JDS proceeds
The Institute of Chartered Accountants is about to commence its JDS proceedings against Ernst & Young, in secret. The hearings are expected to last 10 weeks and will look at whether E & Y should have qualified the Equitable’s accounts all the way back to 1994. Click here to read more.
24/02/2007 - Canada Life ratified
On 1st February, the High Court, orchestrated by Equitable’s solicitors Lovells, ratified the disposal of 90% of Equitable’s not for profits pensions book to Canada Life. John Newman made a written submission about the report of the Independent Actuary and expressed his concerns for remaining with-profits policyholders. Notwithstanding, the disposal was rubber stamped.
24/02/2007 - OP victims triumph in JR
On 14th March, 2006 the PO published a report, finding in favour of victims of failed Occupational Schemes. The Department of Work and Pensions rejected outright the finding and refused to act on the PO’s recommendations. Despite the select committittee on Public Administration (PASC) backing the PO to the hilt in its own report in July 2006, the DWP remained determined to do no more than tinker with its Financial Assistance Scheme (FAS). Even today the minister continues to propagate the porkie that the bill could be £15bn, when the true cost of full remedy is estimated to be £150m pa, tops.
The victims brought a Judicial Review through the same solicitors that EMAG retains, Bindman & Partners. On 21st February Judge Bean upheld the PO’s finding of maladministration and instructed the Secretary of State to reconsider. This was a timely wake-up call to Parliament. The press the DWP received was blistering. Read two typical examples from the Daily Telegraph.
This is prospectively a dress rehearsal for the reception of PO 2, the PO’s report into Equitable, due in June. It is extremely important to Equitable sufferers that MPs stand up now for the office and the recommendations of the PO. There are some signs of the this happening: However, the minister, John Hutton’s Statement to the House implies that the Government is STILL considering continuing to tough it out by possibly appealing the Judgement of the JR. Hopefully, the Commons will shame the DWP into finally doing the honourable thing by the victims, which would improve the climate for reception of PO 2. Read Hansard for the Commons debate that followed.