Equitable Life payout report 'is unsound'.
"A government-commissioned report that said victims of the Equitable Life scandal should receive compensation of just £266 each has been branded 'unsafe' and 'unsound' by the Parliamentary Ombudsman. The verdict yesterday by Ann Abraham has given fresh hope to the victims, who feared they would be left with a 'scandalously' low amount if the Coalition adopted the proposals.
Many of the victims of Equitable Life's near collapse lost most of their life savings. However, Sir John Chadwick's report, published last week, recommended that they receive just £400million compensation in total – about £266 per policyholder.
This was despite a report from a consultancy firm, published at the same time, which suggested losses sustained by policyholders were between £4billion and £4.8billion.
Ms Abraham wrote to all MPs yesterday saying the Chadwick report was an 'unsafe and unsound basis on which to proceed', and accused Sir John of 'explicitly rejecting' her help when deciding on the level of compensation that should be paid.
Equitable Life victims fear the Coalition will adopt the Chadwick Report despite assertions from the Treasury Minister Mark Hoban that the Conservatives would abide by Ms Abraham's own report in 2008, which found the Government guilty of maladministration and recommended a full compensation scheme.
Paul Braithwaite, head of the Equitable Members Action Group (EMAG), said the ombudsman's stance had 'vindicated EMAG's assertion that the Chadwick Report was a Treasury dirty trick to cheat Equitable Life policyholders'.
Ms Abraham said of the Chadwick Report: 'These proposals, if acted upon, would not in any sense enable fair and transparent compensation to be delivered.'
The Labour government agreed to set up a limited scheme that would compensate only those who had lost the most, and instructed Sir John to proceed on that basis. Mr Hoban said at the time that the Tories would accept the ombudsman's findings and pay out on that basis.
However, when he published the Chadwick Report last week, Mr Hoban said it would be an 'important building block' in deciding how much compensation victims would receive. He also indicated that the amount would be constrained by Britain's economic woes."
Daily Telegraph, by Rosie Murray-West - 27 July 2010
"Equitable Life victims warn of low pay-out.
Victims of the Equitable Life scandal will this month learn details of a long-awaited compensation package, but are warning that the coalition government will offer them only a fraction of what they are demanding.
Mark Hoban, Treasury minister, has promised to make an announcement in mid-July and has assured policyholders he will create a 'transparent, fair and independently designed' payment scheme.
But policyholders believe the eventual sum paid out will be about £1bn, far less than the £4bn-£5bn they have been demanding.
They had cheered the coalition agreement published in May because they believed it committed the new government to implement in full the 2008 recommendations of the parliamentary ombudsman, who calculated the multibillion pay-outs.
But now they are angry that Mr Hoban has kept faith with a review of their claims instigated by the last Labour government, under the chairmanship of Sir John Chadwick, a process they believe is discredited.
EMAG, the policyholders' action group, believes Sir John's terms of reference were over-complicated and were deliberately framed by Labour to minimise payments.
The group claims that continuing to rely on Sir John's work without any change to his terms of reference is likely to produce an actuarial fudge designed to understate the true scale of losses by as much as 80 per cent. 'His discredited terms of reference from the Labour government were heavily criticised by the parliamentary ombudsman who said that they would not deliver the justice she had called for,' said Paul Braithwaite, of EMAG.
'Instead of sidelining Sir John or updating his terms of reference to reflect their election promises, the coalition has allowed the process to continue with no change whatsoever. It looks as though, after 10 years of obstruction, the Treasury is still in control and determined to short-change victims.'
David Cameron has vowed to end the wait for compensation for policyholders. The prime minister has insisted the payments should not be means-tested and that descendants of deceased policyholders should be included.
Mr Hoban will announce this month that an independent commission will be set up to administer the pay-outs, which arise from the near collapse of the world's oldest insurer 10 years ago. A million people lost up to half of their life savings.
The government will publish Sir John's report – possibly next week – which will advise on issues such as relative loss suffered by policyholders and the impact of their losses.
Labour made little secret of its willingness to kick the Equitable case into the long grass."
Financial Times, George Parker 9th July, 2010
See this and other press coverage.
"Equitable Life group's last-ditch compensation bid.Equitable Life policyholders are making a last-ditch effort to win support from the coalition Government for an independent commission to award them compensation.
Equitable Members Action Group (EMAG), which claims support from 40,000 policyholders, is urging the Government to follow the recommendations of the parliamentary ombudsman (PO) for a commission, and to 'marginalise' the report of Sir John Chadwick due to be published next week.
Retired judge Chadwick was appointed by the last Government to adjudicate on making payments only to classes of policyholder who had been 'disproportionately affected', and was steered by the Treasury towards a complex discount mechanism which reduces the value of any payouts.
The Treasury had hinted that compensation would be limited to £1 billion rather than the £4.7bn implied by the PO's report.
Paul Braithwaite, general secretary of EMAG, said yesterday that 380 MPs had signed a pledge before the election to support 'proper compensation' from an independent scheme, while new Conservative Treasury minister Mark Hoban had said he was 'committed to implementing the Ombudsman's recommendations'.
Ann Abraham, the ombudsman, was highly critical of the last Government's response and its terms of reference for Chadwick.
Braithwaite has told EMAG members: 'The Treasury's intention, based on Sir John Chadwick's work, is likely to be a clever actuarial fudge which will seem to show that, even if Equitable Life had been properly regulated, compared with the worst performing pension life companies we have hardly lost much at all.'
He says it was 'outrageous' that Chadwick was allowed to proceed with unchanged terms of reference, which were 'entirely incompatible with the Po's recommendations and hence totally at odds with the coalition's promise and MPs' individual pledges'.
Braithwaite commented: 'Chadwick's report was conceived to both delay and to minimise payouts on what was essentially a charity hardship scheme, on the instructions of the Labour Government ... We want independent assessment of the losses that will form the basis of compensation, not just independent distribution of compensation.'
EMAG has been refused by the Treasury an explanation of the critical methodology used by actuaries Towers Watson to determine the relative performance of Equitable Life and other insurers in the 1990s."
The Herald, Simon Bain, 8 July, 2010
"Q: In the coalition agreement, the government said it would make fair and transparent payments to Equitable Life members. When is this likely to happen?
Steve Webb's answer:
I think the important thing to say about Equitable is the difference between the coalition's view on the ombudsman's report and the previous government's view is that the coalition accepts the thrust of what the ombudsman had to say.
I think the Ombudsman objected to the previous administration picking and choosing from her findings.
We said we accept the report, and now it's a question of looking at other spending commitments as well, what can be afforded for Equitable and then what is a fair way of allocating that pot. That’s the process that's going on now."
IFA Online, by Pensions Minister, Steve Webb MP, 1st July 2010
"The Government is committed to implementing the Ombudsman's recommendation to make fair and transparent payments to Equitable Life policyholders, through an independent payments scheme, for their relative loss as a consequence of regulatory failure.
We will be introducing a Bill in the first session of this parliament that will enable payments to be made and will be establishing an independent commission that will determine the design of the payments scheme. This is a sign of our commitment to deliver on the pledge we made in our Coalition Agreement."
Daily Telegraph, Mark Hoban (Financial Secretary to the Treasury) 26 June, 2010
"Play fair over Equitable. The new Government got off to a promising start with Equitable Life. Last month, it pledged to set up a 'transparent, fair and independently designed' compensation scheme for some of the 1.1 million policyholders who lost money when the mutual nearly collapsed in 2000. The statement appeared to reverse the previous government’s promise that only those 'disproportionately impacted' would receive anything. Hopes were stoked that up to £5 billion would be paid out in short order. An estimated 15 Equitable Life policyholders die every day, meaning that about 55,000 have gone to their graves without financial remedy since Equitable’s disaster.
The coalition promised to remove means-testing and allow descendants of deceased policyholders to claim.
But now the new Government appears to be back-peddling.
According to campaign groups such as EMAG, the main problem is the Treasury’s decision to wait for Sir John Chadwick, the retired judge who has been assessing customer losses at Equitable, to publish his final report next month before coming up with a final figure. To their fury, Sir John’s terms of reference, set up by the last government with the aim of paying only the most needy, have been left unchanged. EMAG fears this will cut compensation by as much as four fifths, to as little as £1 billion.
The Government must be fair on Equitable. It may be reasonable to argue that, with so little in the Treasury’s kitty, policyholders should take a haircut. Like the thousands in the public sector facing pay freezes and lost pension rights, Equitable’s customers should expect to share some pain. But a cut of 80 per cent is simply not fair. If Sir John really is working towards a £1 billion figure, he should rethink, or be ignored."
The Times, by David Wigton 18 June, 2010
"Equitable victims fear £4bn Treasury 'ambush'
Campaign fighting for victims of the Equitable Life scandal have rounded on the Coalition Government, warning that a "Treasury-inspired ambush" could cost policyholders almost £4bn.
The Equitable Members Action Group (EMAG), which represents policyholders who lost billions in the pension provider's near-collapse in 2000, said it believed the Government was planning a 'huge reduction' in the compensation offered to victims. The warning came after ministers failed to give reassurances over the calculations for the final amount due.
EMAG claims the losses incurred by the victims reached £4.67bn. This was the figure published in Parliamentary Ombudsman Ann Abraham’s report into the scandal in 2008.
However, the group claims the Treasury could lower the payment to £1bn by 'rebranding' the cheaper ex-gratia scheme proposed by the last administration. The Coalition had agreed to uphold proposals originally outlined by the Ombudsman, recommending substantial compensation for more than a million policyholders.
'Given the Treasury’s continuing refusal to make public the calculations of [the actuary] and the many unrealistic assumptions they have been briefed to make, our suspicion is that what they are doing is nothing better than a work of fiction designed to come up with the number the Treasury intended in the first place,' said Paul Braithwaite, a spokesman for EMAG.
'We are deeply disturbed by the gulf between the expectations raised by the Government’s promise and what appears to be going on at the Treasury.'
In a letter to MPs, EMAG added that Equitable victims should 'not be first in line to shoulder the whole burden' of Government cuts.
'If health, education, civil service pensions, local government salaries are to be subject to cuts, then one might expect us to shoulder part of the burden by accepting the same percentage cut as other spending commitments – but robbing 80pc from the compensation due to one million Equitable Life victims would be an outrage.'
The Treasury did not comment."
The Daily Telegraph Jamie Dunkley 16 June ‘10
“Nervous wait for Equitable campaigners. EXPECTATIONS have been raised of a multi-billion pound payout to more than a million Equitable Life victims, after the new government promised a "fair and transparent" settlement for all.
Campaigners have been fighting for a decade for £4.8 billion compensation to cover what they claim they lost, when the UK's most trusted insurance company collapsed. Both the Conservatives and Lib Dems supported their activities when in opposition and, as one of their first moves in office, promised money would be forthcoming.
But after initial euphoria, investors are becoming increasingly nervous about what precisely the coalition has in mind, and at the lack of detail accompanying the government's statement.
Treasury secretary Mark Hoban has guaranteed that a new bill will be forthcoming, establishing a scheme of compensation. He also pledged that payments would not be means tested, and the thousands who have died since the scandal broke, will not be shortchanged. Their estates will be credited with any redress due.
These two issues were major points of contention with the last government, which had set up a commission under Sir John Chadwick with a specific and tightly worded remit.
Now, however, some campaigners are concerned that investors' hopes may have been raised prematurely, given the caveats in a letter from Hoban, in which he also stresses "the impact of any scheme on the public purse must be taken into account". More worryingly, although the government has pledged to set up an independent commission, which will determine the design of the payment scheme, there are concerns it may all but rubber stamp the findings of Chadwick, who was appointed by the previous government.
His brief, at that time, was to concentrate on those who had been "disproportionately impacted". In other words compensation would be paid according to need, not justice.
Donald Scott, an East Scotland representative of the Equitable Members' Action Group (EMAG), said: "I am concerned, because I am not sure where we are going from here. The Parliamentary Ombudsman said we should be compensated according to rules drawn up by an independent commission. Chadwick was commissioned by the Treasury, so we don't see him as being independent at all. We felt he was discredited."……
Scotsman, Teresa Hunter, 6 June, 2010
"Equitable Life victims need justice. The coalition government has moved decisively to help Equitable Life policyholders waiting for justice, says financial secretary to the Treasury Mark Hoban...
Yesterday, the coalition Government took a major step towards ending that injustice. We were proud to announce the introduction of a Bill that will finally enable payments to be made to policyholders. We have also made a firm pledge to compensate dependants of deceased policyholders and that payments will not be means tested.
These two factors show our commitment to a swift, simple, transparent and fair payment scheme. The policyholders have waited long enough for justice. This coalition is built on the principles of freedom, fairness and responsibility. We recognise the Government's responsibility to tackle this issue and to do so in a way which is fair to both policyholders and taxpayers.
Our independent commission will determine the design of the payment scheme. While we appreciate the need to implement a payment scheme quickly, the impact and implications of events in relation to Equitable Life are complex, and it is important our approach is thorough, transparent and fair.
We believe this will give policyholders the confidence that they have got the best possible deal. But, as the Ombudsman accepted, we also recognise that the impact of any scheme on the public purse must be taken into account.
This issue means a lot to me. I have been working on it since 2005 and since coming to office I have had meetings with Sir John Chadwick, who was appointed by the previous government to advise on compensation, as well as Equitable Members' Action Group and Equitable Life.
The fact that we have announced within two weeks of being in power that we will introduce a Bill proves how serious this Government is about helping policyholders.
We are very aware of the distress among policyholders who have suffered loss, and the strong desire to achieve a solution quickly. While there will be frustration at the short delay to Sir John's report, it is important our approach is thorough and fair.
The Government is working hard to address the situation as quickly as possible, in order to ensure the establishment of an independent payment scheme that is fair to both taxpayers and policyholders."
Mark Hoban MP, financial secretary to the Treasury Daily Mail 25 May 2010
"Coalition Government: Equitable Life victims to get compensation
All victims of the Equitable Life scandal will now be handed compensation for the losses they suffered in a move campaigners hope will bring an end to a decade of 'denial and obstruction'.
The new coalition Government has agreed to uphold proposals originally outlined in a report into the insurer’s near-collapse in 2000 by Parliamentary Ombudsman Ann Abraham in 2008.
The report recommended substantial compensation for more than a million policyholders who lost pension savings when the company was forced to close to new business.
At the time, Ms Abraham’s damning report into Equitable Life found the Labour Government guilty of maladministration on 10 occasions but the Government said it would only offer limited compensation to victims.
However, in a statement yesterday, the new coalition Government said it would agree to implement the Ombudsman’s recommendation to make 'fair and transparent payments to Equitable Life policyholders, through an independent payment scheme'.
This upheld manifesto pledges made by both the Conservatives and Liberal Democrats.
The news was welcomed by campaigners who have lobbied for full compensation for victims.
Speaking yesterday, the Equitable Members Action Group, which represents 21,000 policyholders, said: 'We welcome the new Government’s commitment to implement the Ombudsman’s report in full. It’s been a long time coming.
'Sadly many thousands of Equitable pensioners have died without justice, sacrificed on the altar of Gordon Brown’s defence of 'light touch' regulation.'
The group said it will now work with the Government to help to ensure a 'swift' start to the process.
It added that it would also explore the possibility of policyholders receiving interim payments."
Daily Telegraph 13 May 2010
Other press:
Independent
BBC
The Guardian
Money Marketing
Citywire
"More Equitable deal on offer for pensioners at the polls. If the polls are right and Gordon Brown leaves Downing Street, one million savers who trusted Britain’s oldest insurer can expect justice at last in the sorry saga of Equitable Life...
The pre-election pledges have been won by an eight-year campaign by the Equitable Members Action Group (EMAG), which has 23,000 members and an array of professional support. Along the way, EMAG has twice humiliated the government in the High Court, and won the support of the European Parliament, the Labour-led Public Administration Committee, a 150-strong standing group of MPs, and the parliamentary ombudsman Ann Abraham. But justice delayed is justice denied...,
When in 2008 Ms Abraham produced her blockbusting 2,800-page report, she found the government guilty of maladministration and injustice, and urged the immediate creation of an independent compensation tribunal which could complete pay-outs to one million policyholders by the end of 2010.
The government sat on the report for five months before publishing it, then waited another six before responding. Finally Treasury Secretary Yvette Cooper went to the Commons in January 2009.
...the minister had rejected the ombudsman’s key findings, as she appointed retired judge Sir John Chadwick to work under Treasury supervision on a low-budget scheme, which would make limited ex-gratia payouts to people who had suffered 'disproportionately'. EMAG estimated it might reach 10% of policyholders.
The Labour-led Public Administration Committee called the response 'shabby and unconstitutional'. More than 300 MPs signed an early day motion by Vince Cable calling for Mr Chadwick to resign. EMAG went back to the High Court, dug deep into its pockets again, and won a ruling forcing Mr Chadwick to widen his remit.
Last month, EMAG withdrew in frustration from the entire Chadwick process.
Mr Braithwaite says:
'It’s a Treasury stitch-up which seeks to negate four years of genuinely independent work by the parliamentary ombudsman... The government has treated us with contempt and brushed us aside time and time again. It is quite heartening that Lord Penrose, then the ombudsman, and now the court, have basically substantiated that these people have suffered an injustice and should be compensated.'
Read the extensive article detailing the time line in The Herald, Simon Bain 2 May 2010
- "Equitable Life losses cost hero his home.
RAF veteran Mark Mead was shot down by the Nazis and held as a PoW. Now aged 90, he is having to leave his beloved bungalow after losing his savings in Equitable Life...
...a month before his 90th birthday, Mark, and his wife Cynthia, are having to sell their beloved bungalow and move to a smaller property after seeing their retirement income plummet.
They are among tens of thousands of older people whose finances have suffered a severe blow after being caught up in the Equitable Life scandal – and who, with the government accused of dragging its heels on compensation, have not yet received a penny...
Over several years, Mark and Cynthia took out a number of Equitable Life products, including two with-profits annuities, which pay an income in retirement. With-profits annuity holders are regarded as the Equitable scandal's biggest losers. These policies were eventually transferred to Prudential, but the way they work means many people have seen their pensions cut by more than half, with the prospect of further falls...
...the family says that this year another Equitable Life investment providing them with an income of £2,000 a year in effect dried up. This appears to correspond to a pair of Equitable bonds which the company says were taken out 20 years ago, and are now worth £1,380. It was this that led the couple to conclude they would have to downsize.
Mark only has a state pension (he relates in his memoirs how, at the firm where he worked for many years, he 'saw several pension schemes initiated which then faltered, so I decided to make my own provision for retirement, and this I was able to do, on a modest scale, but without any contribution from the company')...
...having never claimed anything from the state, they are now getting pension credit and attendance allowance. Cynthia says she was reluctant because of the stigma in claiming benefits. Their council tax has also been reduced.
'It's unbelievable it should end like this,' says Cynthia, adding she feels sad because it's only in the last few years they have had to worry about money. She believes they, and many others, were victims of the 'mismanagement' of Equitable but, aside from that, says: 'I don't blame anyone particularly.' Asked how he feels about it all, Mark says: 'Thoroughly depressed.'..."
Read the whole sorry story at:
The Guardian, Rupert Jones, 17 April, 2010
"Watford MP Claire Ward has been accused of 'betraying' the thousands of constituents fighting for compensation after losing their pension funds.
Ms Ward agreed last month to sign up to an all party group of MPs supporting former investors in Equitable Life, many of whom saw their retirement plans ruined when the company came close to collapse in 2000.
However, angry campaigners have now accused her of reneging on her earlier promises and ''deceiving'' the estimated 9,000 victims in her constituency.
Stuart Pole, chairman of Equitable Members Action Group (EMAG) in Hertfordshire and Middlesex, said the Labour MP reneged on the pledge at the end of March, when she voted against House of Commons motion that, its Conservative and Liberal Democrat backers claimed, would have brought full compensation a step closer.
Mr Pole, of Radlett, said: 'We deeply regret Ms Ward's behaviour in this matter also now includes deceiving Watford constituents by undertaking to support them and then betraying them.'
Mr Pole also expressed frustration at Ms Ward’s lack of cooperation with the group on individual cases.
Liberal Democrat parliamentary candidate Sal Brinton, whose party supports full compensation, added: 'This motion would have been a major step forward. I am disappointed and outraged at her failure to support 9,000 constituents.'
A spokesman for Ms Ward, however, dismissed the claims as 'absolutely ridiculous and wrong,'...
Ministers, however, have only proposed ex gratia payments to those 'disproportionately affected' – a process that avoids the acceptance of blame and raises, EMAG claims, the possibility of means testing.
Labour’s chief secretary to the Treasury Liam Byrne, however, said in February that such a course of action was 'neither desirable nor administratively feasible'.
EMAG is demanding full compensation."
Watford Observer, Neil Skinner, 16 April 2010
Two triumphs for EMAG:
"We will make pensions and benefits fair and reward savers by: Meeting the government’s obligations towards Equitable Life policyholders who have suffered loss. We will set up a swift, simple, transparent and fair payment scheme."
Page 18 of the LibDem manifesto
"We must not let the mis-selling of financial products put people off saving. We will implement the Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policyholders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure."
Page 12 of the Conservative manifesto
"Fresh political battle looms over Equitable policyholders: Equitable Life policyholders believe a review into compensation due to be published shortly by retired judge Sir John Chadwick will be a whitewash following pressure from the government to delay and scale back their claims. The company's new management, led by chief executive Chris Wiscarson, is also understood to be 'deeply troubled' by the direction taken by the Treasury-commissioned review.
But the decade-long Equitable Life scandal is threatening to embarrass both leading political parties in the run-up to the election. The Conservatives have attempted to take the high ground by promising an independent body to determine compensation, but have floated a sum of £1bn instead of the £4-5bn estimated by the Equitable Members Action Group (EMAG).
Paul Weir, an EMAG spokesman, said Chadwick's third interim report was 'a cynical stitch-up designed by his Treasury masters.' The final version is due in May. He added that he welcomed the Conservative pledge to move quickly on redress but said: "'If the Tories undershoot on the amount it will backfire and fester on for years." Policyholder Les Crouch from Cardiff added: 'Good news, but a 25% payout? We must keep the pressure on.'
Vince Cable, the Lib Dem Treasury spokesman, has written to EMAG saying that the government's approach to compensation is 'flawed'...
Any payments to Equitable victims will be controversial at a time when the credit crunch has stretched the public purse. But Weir says: 'It is not our fault that there was profligacy by the banks. All we want is our own money back.'"
The Observer, Ruth Sunderland, 4 April 2010
“Following your meeting with Oliver Letwin and me, I can confirm that we support the EMAG pledge and we will encourage Conservative candidates to sign it.
Since the Ombudsman published her report in July 2008, we have made it clear that we accepted her recommendation that compensation should be paid as a consequence of maladministration.
We support her recommendation that this should be based on the relative loss suffered by policyholders and we believe that this should ensure that the payment scheme is simple, transparent and fair.
We also support the Ombudsman's view that it is appropriate to consider the impact of any scheme on the public purse. This will need to be borne in mind when we set the terms of reference of an independent scheme to implement her recommendations.
The design of this scheme will be determined independently of government with two exceptions:
- There should be no means testing; and
- Payments should be made to the dependants of deceased policyholders.
We would welcome EMAG's co-operation with the independent process to design and implement the compensation scheme.
It is time for the Equitable Life's policyholders to receive the justice they deserve. As David Cameron said recently, “If we win the election, we‘re going to sort out Equitable Life very early on”. We believe by endorsing EMAG's pledge and setting out this process we will deliver on that commitment.”
A letter, dated 2 April 2010, from Mark Hoban MP, Conservative Shadow Financial Secretary to the Treasury, to Paul Braithwaite and EMAG.
And a similar commitment letter from Vince Cable on behalf of the Liberal Democrats.
"Equitable Life reports increased policy values.
Equitable Life has predicted a 'real positive momentum' in the year ahead as it revealed an increase in assets for policyholders. In its preliminary results for the year ended 31 December 2009...
Ian Brimecome, chairman of Equitable Life, said despite a challenging 2009 the society had benefited from the completion of the contract with HCL to provide administration services from March next year which had added millions of pounds of value to policyholder funds...
Chris Wiscarson, chief executive of Equitable Life, said the society would continue to focus on maximising the return on policyholder assets subject to meeting solvency requirements; providing the best value for money cost base; and achieving maximum government compensation for policyholders.
He said: 'It is our intention to distribute all of the assets amongst with-profits policyholders as fairly as possible over time.'
Mr Wiscarson congratulated the Equitable Members Action Group (EMAG) on its success in getting the government to change the terms of reference of Sir John Chadwick's compensation proposals so that his advice on a compensation scheme will be more comprehensive than it might otherwise have been..."
FTAdviser, by: Catherine Couch 1 April, 2010
"Tuesday evening saw yet another debate on Equitable Life in the House of Commons. Despite several Labour MPs making speeches very hostile to the Government, with Barry Gardiner (Brent North) being the most forceful and eloquent, the Government motion was passed by 291 votes to 236 votes. Those are the hard facts and anyone who has followed the Equitable Life saga since the mid-1990s will be inclined to let out a sigh of despair and conclude that nothing much has changed and that the 1.5 million policyholders - average age now 79 - are still no nearer knowing what compensation, if any, they will receive. That would be an unduly pessimistic view…..
What the opposition team led by shadow Treasury spokesman Mark Hoban said was that they would hope that, if the Chadwick review is genuinely independent, it will come up with some proposals that are nearer to the original Ombudsman's report than so far supported by the Government.
Of course, there are severe doubts among policyholders that Chadwick is anything other than a Treasury stooge working to a brief to come up with the most limited, cheapest scheme he feels he can get away with. This view was forcefully articulated by the Equitable Members' Action Group in the wake of the publication of Sir John's third report a couple of weeks ago...
There was a concerted push by the Liberal Democrats to extract a commitment to make interim payments to policyholders but this didn't win enthusiastic support from the Tories and was ruled out by the Government.
The conclusion I have come to on reading through the debate in Hansard a few times is that there is now very little difference in the position of Labour and Conservative front benches, although the Tories hint at a more generous settlement should Chadwick fall short of their hope that he will recommend a scheme similar to that envisaged by the Ombudsman last year. Attempts by Government ministers to get the Tories to be specific on this commitment forced Mark Hoban onto the defensive with the plea
'We do not know what the bill will be'.
He almost sounded for a moment as he was practicing for when he might be a minister himself. One thing I have learnt to refrain from referring to any twist or turn in this sorry tale as the 'final chapter' again."
David Worsfold, IFA Online 18 March 2010
EMAG had concerns about the debate with regard to 'The Chadwick Process' and wrote a letter to EVERY MP immediately.
- "The action group representing Equitable Life policyholders accused the Treasury of a 'stitch-up' last night.
Equitable Members’ Action Group (EMAG), which represents 25,000 policyholders, some of whom lost their life savings during the society’s near-collapse a decade ago, has withdrawn its support for a Treasury-commissioned review into compensation payments.
Instead of co-operating with Sir John Chadwick, who was commissioned in January last year to explore payments for policyholders 'disproportionately' hit by Equitable’s financial troubles, the group said that it would campaign for a full compensation fund to be established...
Paul Braithwaite, general secretary of the Equitable Members’ Action Group, told The Times last night that Sir John’s review, the conclusions of which are due in May, was a Treasury 'sham' that was being controlled by civil servants.
Mr Braithwaite said that the Treasury was using the review to 'retry the case' of Equitable and attempt to deny any obligations to make good policyholders’ losses.
Rather than the billions that they were due, policyholders were likely to end up with 'only several hundred millions', he said. The action group’s campaign will focus on existing and prospective MPs, many of whom have numerous constituents who hold worthless Equitable policies, he said.
The Treasury said it regretted the group’s decision and that it had taken account of its submissions. A spokesman said it was commited to a 'fair resolution for policyholders."
The Times, by Miles Costello 16 March 2010
See EMAG’s press release
"Savers warned about high price of leaving Equitable Life. People who transfer pensions out of the beleaguered insurer Equitable Life don't know the true cost of doing so, a whistle-blower claims... But Britain's oldest insurance company – which was forced to stop selling new policies 10 years ago when the House of Lords ruled against it – says it treats all its customers fairly...
...a source close to the company claims that people younger than 60 – the minimum age at which Equitable allows pension plan-holders to take benefits without any exit penalty – are not told the full difference between what they can obtain as a transfer value and the maturity value they would receive if they waited until they were 60...
'So, people who have asked for transfer values since then are told about a 5pc market value adjustment (MVA) but not about the 16pc reduction..
Equitable Life spokesman Alistair Dunbar said: 'It is the words that are the problem here – not the meaning. The difference between the surrender value and the contractual value is something that we are completely open about. I am not saying that the person who has made these allegations is not genuine...
'The problem affects clients who are not old enough to achieve the full value of their policy. For example, if you call Equitable Life for a value of your policy and have not reached the minimum contractual age, you will only be given a 'transfer value' and not a full maturity value. The official reasoning is that any activity on the policy – for example, moving to another provider – is breaking the contract and therefore the full maturity value is not applicable and not given...
Paul Braithwaite of the Equitable Members' Action Group added: 'These appear to be very serious revelations which we hope and expect the new chief executive of Equitable Life, Chris Wiscarson, will investigate thoroughly.'
A spokesman for the Financial Services Authority said it could not comment on its supervisory role in relation to any individual company, but it is determined to ensure that all regulated firms treat their customers fairly."
Saturday Telegraph, Ian Cowie 6 March, 2010
"Honor Blackman battling for the Equitable pensioners
Liam Byrne had better watch out. The 'forces of hell', which his Darling boss at the Treasury had to contend with, may seem like summer breezes compared to the Fury sitting opposite me in a Notting Hill café, plotting revenge. 'It would be quite something to hit the Treasury minister about,' says his nemesis, waving scarlet finger-nails and flashing a singularly steely pair of ice blue eyes...
Blackman is 'mad as hell' about the decade of government prevarication regarding a settlement for the thousands who have been left all but destitute in their last years. 'It sounds like we are asking for charity,' she fumes, 'when we were deliberately defrauded by being sold policies which Equitable knew they couldn't honour.' Why else would she make the supreme sacrifice of being photographed holding onto a giant cardboard cheque for £5,000 addressed to a notional Equitable Life sufferer? ...
Blackman is the most prominent, and glamorous, of the 44,000 Equitable Life annuitants – average age 79 – who have yet to receive any compensation for the mismanagement of their funds. It is 10 years now since the insurer slashed payments, having run deep into debt by promising more than it could deliver...
'These are people the Government should think are wonderful,' she says. 'We were responsible, prudent, we provided for our retirement so that we wouldn't be a burden on the state or our families. These people are having to sell their houses and live on benefits. But they ignore us. Yet if you gambled with your money, and put it in Iceland, you were promptly reimbursed.'
This Wednesday she attended a meeting at the House of Commons, along with 93 MPs, including the Lib Dem Vince Cable, a long-time critic of the Government's 'shameful' handling of Equitable. There Byrne and Chadwick promised action within two weeks of the latest report being published in May – just when a general election is expected.
'I think they hope they won't have to deal with this. But someone will bring justice...
One reason why Equitable Life pensioners may have been left to rot is the misconception that they are rich people who can afford to take the knock. But, she points out, the typical value of their annunity pots is £47,000 from which individual pensioners have been receiving only £2,200 a year, half what they were promised...
She seems to be relishing the action and attention so much that I wonder whether other Avengers will also turn vengeful. Perhaps Diana Rigg will battle for the angry patients of Stafford hospital? 'I doubt it. Diana has distanced herself from the Avengers. But I am happy to man the guns for EMAG, any time'."
Daily Telegraph, by Cassandra Jardine 26 Feb
"Equitable Life savers get callous treatment
The Government seems determined to leave the Equitable Life debacle to be cleared up by its successor. The Government’s regulatory incompetence in the Equitable Life debacle has now given way to callous cynicism, It is 19 months since Ann Abraham, the Parliamentary Ombudsman, identified 10 instances of maladministration between 1991 and 2001 ...
Why the tardiness? Could it have anything to do with the fact that the claimants whose need is the most pressing – those on devalued annuities – have an average age of 79? As David Cameron has pointed out, the Government is simply waiting for them to die...
Mr Cameron has described this strategy as 'sick', and he is right. Miss Cooper and her successor, Liam Byrne, have behaved shamefully. Last October, Mr Byrne was asked in the Commons when payments would start. His reply? 'That, I know, is the million-dollar question, which I cannot answer this afternoon.' It is worth contrasting this with the compensation awarded to miners a decade ago for illnesses incurred in the pits, when 90,000 claims worth more than £4 billion were settled in short order. But then, the victims of the Equitable Life collapse are not natural Labour supporters.
At a protest meeting yesterday, the actress Honor Blackman, an indefatigable campaigner on the issue, called for interim payments to be made to the 44,000 most elderly victims, ahead of Sir John’s full report. If the Government had any sense of decency, it would accept the proposal – though we fear it is determined to leave the mess to be cleared up by its successor."
Leader Column in the Daily Telegraph, 19 Feb
See also:
Best of media : Coverage of Honor Blackman fronts EMAG’s call for interim payments to WPAs
And
EMAG’s press release explaining the proposed payment on account for locked in annuitants.
"David Cameron: Labour 'waiting for Equitable Life victims to die'
David Cameron has accused Labour ministers of waiting for Equitable Life victims to die in order to avoid paying them proper compensation.
The Tory leader attacked Labour's 'sick' approach to Equitable Life as policyholders in the collapsed company grow increasingly angry about delays in compensation payments promised by ministers. More than a million customers lost up to 50 per cent of their pensions and savings when Equitable came close to collapse in 2000, opening one of the largest financial scandals in British history.
Ann Abraham, the Parliamentary Ombudsman, in July 2008 ruled that the collapse of Equitable Life followed a 'decade of regulatory failure' by ministers and officials.
The inquiry said that the public had been misled and that the Government should apologise and pay compensation to policyholders of the insurer.
After years of refusal, the Government last January promised ex-gratia payments to people who had been 'disproportionately affected' as 'swiftly as possible'. No such payments have yet been made.
The Equitable Members Action Group estimates that more than 40,000 policyholders have died since the company closed its books to new business. The group says that 15 more policyholders die every day.
In a 'Cameron Direct' meeting with voters in Romsey, Mr Cameron promised that a Tory government would resolve the issue quickly, and attacked Labour over its delays.
Cameron said: 'The Government has put it off and put it off and in a very sick way, I think, they’re waiting for people to die.'
He added: 'If we win the election, we’re going to sort out Equitable Life very early on.'
There is wide support in the House of Commons for the Equitable victims, and last year, more than 350 MPs of all parties signed a Commons motion calling for full Government compensation.
That could cost as much as £4.5 billion, and Mr Cameron stopped short of saying exactly how he would 'sort out' Equitable Life in power.
Yvette Cooper, then the Chief Secretary to the Treasury, told the House of Commons last January that the Government accepted that policyholders had suffered 'injustice'. She promised that ex-gratia payments would be made to people who had been 'disproportionately affected' as 'swiftly as possible'.
The Treasury then asked Sir John Chadwick, a retired judge, to review the impact of the firm's collapse on its policyholders. Those he identifies as most deserving will get 'ex gratia' payments from the Government.
However, Equitable campaigners say they are increasingly exasperated with the time Sir John is taking. He is not expected to produce his final report or any details of a possible repayment scheme until after the general election in the spring.
Paul Weir from the Equitable Members Action Group said: 'The Treasury is taking as long as possible to do very little. While the Government sits on his hands, the increasingly aged victims of this scandal are dying off in greater and greater numbers – no doubt exactly what the Treasury is hoping.' "
Daily Telegraph, by James Kirkup, 17 Feb ‘10
"MP Claire Ward has clashed with a campaign group whose members lost up to 50 per cent of their pensions in the near collapse of Equitable Life.
Campaigners from the Equitable Members’ Action Group (EMAG) Hertfordshire and Middlesex Branch are fighting to recoup the losses incurred by thousands of local pensioners after the failure of the company in 2000. They argue that clear regulatory failings – highlighted by the High Court – mean the Government should compensate all savers who lost money in the company. Ministers, however, have so far resisted blanket repayments and are currently awaiting the findings of a Treasury-sponsored review before any compensation scheme is agreed.
Stuart Pole, chairman of EAG Hertfordshire and Middlesex, however, argues that any such scheme is likely to involve an element of means testing and would still leave savers out of pocket. Repeated attempts to lobby Ms Ward’s support, he added, had proved unsuccessful, with requests for answers often ignored. He said: 'We work with seven MPs and Claire Ward has given us the least support of all. She has not lifted a finger to help us. This is bizarre because we are an electoral force.'
But Ms Ward defended her record on the matter. She said: 'I am very sympathetic to the situation that Equitable Life policyholders find themselves in and fully understand why they are concerned.'..."
Watford Observer, Neil Skinner, 2nd February, 2010
"Equitable Members’ Action Group accuses Government of delaying tactics: The Government has ensured that no compensation will be paid to Equitable Life victims until well into the next parliament, nine years after the scandal broke, and is 'preoccupied with finding new ways to reduce the value of payouts' from the scheme it set up.
The claim, from the 23,000-strong Equitable Members’ Action Group, which has twice won legal victories over the government in the High Court, came yesterday on the first anniversary of the government finally agreeing to set up a restricted payment scheme for compensation...
EMAG says the Treasury has slowed progress by insisting that the scheme should apply seven complex 'discounts' to the assessment of policyholder losses. They include a discount for the failures of Equitable's management, for the failures of the auditors Ernst and Young, for the responsibility of the investor, for the probability that some pensioners would still have invested even without the maladministration of the regulators, and for any excessive bonuses declared before 1991.
Additionally, EMAG claims that the proposed use of a 'weighted' basket of comparative pension products provides ample scope for 'financial conjuring' to reduce the bill still further. Already Chadwick has been told by the Treasury to make payments only to those who are 'disproportionately affected' – a term which remains undefined.
Braithwaite said: 'EMAG will campaign for the next government to hand Sir John's work on calculating true losses over to an independent body to administer compensation, rather than the fudged, minimal, ex-gratia scheme currently planned by the Treasury - the department that was found guilty of regulatory failure in the first place,' said Braithwaite.
The group is planning to target candidates of all three main parties in more than 550 constituencies in the run-up to the election to seek their support. It already advises parliamentary group Justice for Equitable Sufferers, which has 150 MP members...
In a recent interim update, Chadwick reported correspondence from the Treasury in which he is encouraged to adopt the most narrow legalistic interpretation possible of the ombudsman’s findings, rather than his preferred 'flexible' and common-sense approach to injustice. The Treasury, he said, 'did not consider the flexible approach to be consistent with the wording of the specific findings in the Ombudsman's report'. Chadwick, however, concluded: 'I am satisfied that I am permitted to adopt the flexible approach. That is what I propose to do.'
EMAG has questioned Chadwick's independence. A Treasury spokesman commented: 'The Treasury has put in place arrangements to ensure there is no conflict of interest.'..."
Simon Biain, The Herald 16 January, 2010
"Equitable Life victims criticise government over delays.
Policyholders at Equitable Life today accused the Government of dragging its feet a year after it promised to make speedy payments to people hit by the problems at the society.
On January 15 2009, the then Treasury Chief Secretary Yvette Cooper told the House of Commons the Government would make ex-gratia payments to people who had been 'disproportionately affected' as 'swiftly as possible'.
She also appointed former Appeal Court judge Sir John Chadwick to examine cases to decide what ex-gratia payments should be made. But a year later, policyholders still do not know when they will be paid or how much they will receive.
Paul Braithwaite, general secretary of Equitable Members Action Group (EMAG), said: 'A year on and Yvette Cooper's promises of speed, parroted at regular intervals subsequently by (her successor) Liam Byrne, have been shown to be hollow and cynical.
'While 15 victims of this scandal die every day, the Government has ensured that Sir John will not even make his recommendations until after the election.''
The agreement to pay redress came after Parliamentary Ombudsman Ann Abraham called on the Government to set up an independent tribunal to calculate compensation for policyholders after finding 10 instances of maladministration by regulators and Whitehall officials in relation to Equitable in the period leading up to December 2001.
The Government rejected some of her findings of maladministration, but EMAG later won a High Court victory when it was ruled that the Treasury had been wrong to reject certain specific findings by the Parliamentary Ombudsman.
A Treasury spokesman said: 'The Government has agreed to set up a payment scheme that is practical and fair to both policyholders and taxpayers, and which can pay out as swiftly as possible.
'Sir John Chadwick has been appointed to advise on the fairest way to proceed. He published his interim report last month and is continuing the detailed analysis of policyholder records that will inform his findings.' "
Daily Telegraph, 15 Jan 2010
"Equitable reverses policy cuts and ends bonus famine. Equitable Life has reintroduced interim bonuses for the first time since the credit crunch.
In a rare piece of good news for policyholders, Equitable, the mutual group that nearly collapsed ten years ago, will reverse cuts made to policy values last March when stock market valuations were at rock bottom.
Equitable said yesterday that customers holding UK with-profits pension plans will receive a one-off rise of 2 per cent to their policies, as well as an interim bonus of 3.5 per cent...
Chris Wiscarson, chief executive of Equitable, said yesterday: 'The society is determined to recreate value for policyholders, and these increases in policy values are small but important steps along this road.'
The mutual cut the value of its with-profits pension and life policies by 2 and 1.6 per cent, respectively, last March, blaming 'challenging economic conditions'. However, improvements in the economy and a money-saving outsourcing deal with HCL, a pensions administrator that now runs Equitable's funds, have allowed the insurer to increase its valuations. It said yesterday that the HCL deal alone had saved it £100 million...
Policyholders recently won a High Court victory when it was ruled that the Treasury had been wrong to reject findings by Ann Abraham, the Parliamentary Ombudsman, after a challenge brought by the Equitable Members' Action Group...
The Accountancy & Actuarial Discipline Board (AADB), a division of the Financial Reporting Council, announced last October that it had opened its own investigation into the conduct of an individual actuary who was involved in the auditing of Equitable's financial statements from 1997 to 1999.
John Newman, the chairman of the Equitable Members' Action Group, said at the time that the AADB's investigation was akin to 'shutting the door after the horse has bolted'."
Helen Power, The Times January 5, 2010
"The closure of Equitable Life to new business cast doubt on the Government’s plans to get people to save through private pensions. One by one, the icons of British insurance have been shattered. First it was Lloyd’s of London, whose individual underwriting 'names' found they had been taken to the cleaners. Then a host of household-name insurers were in the dock for mis-selling personal pensions...
The (Equitable) case raises some fundamental questions about the provision and regulation of private pensions in Britain. One concerns the mainstay of life insurance and pensions, the with-profits fund... the drawback of this approach is now manifest: no one, it appears, from the chief actuary down, fully understood the risks to which Equitable’s with-profits fund was exposed.
The debacle at Equitable Life also poses questions about the adequacy of regulation……The Financial Services Authority (FSA), which has been regulating the life insurance industry since the start of 1999, argued that the Law Lords’ ruling changed everything. But this seems odd, since as early as 1998, the Treasury, which then regulated the industry, was seriously worried about the solvency of Equitable Life...
Even before Equitable’s crisis, the private-pension business was having problems. Saving for retirement through pensions was once seen as a no-brainer for the better-off because of the tax privileges. But the lowering of the top rate of tax to 40% in 1988 and the abolition of dividend tax credits for pension funds in 1997 eliminated many of these advantages..."
The Economist: Note that this article was written NINE years ago, on 21 December 2000.
Honor Blackman blames PM for Equitable delays
"Actress Honor Blackman has blamed the Prime Minister for the delays in compensation for Equitable Life customers.
Ahead of a key ruling on the Equitable Life scandal this week, the 84-year-old told The Telegraph that putting the Treasury in charge of payment amounts for victims of the life assurer's near-collapse in 2001 was like putting 'the fox in charge of the hen house'.
Her comments came as Sir John Chadwick, a former High Court judge, prepares to give an update on a compensation scheme for over 1m eligible policyholders on Wednesday.
Ministers had previously rejected the Parliamentary Ombudsman's calls for £4bn- worth of compensation.
Ms Blackman, who lost half of her own Equitable Life pension, said: 'When the election comes, we want the independent tribunal that the Parliamentary Ombudsman called for.' "
Daily Telegraph, Jamie Dunkley, 13 December, 2009
"People have been thrown to the wolves. Honor Blackman implores the Government to help the thousands affected by the Equitable Life debacle.
When I bought my pension from Equitable Life in the early 1990s I assumed that it would be prudently invested, safely managed and properly regulated so that when I needed it, it would be there for me. But the Government’s regulators have failed me and a million other people with Equitable Life pensions and savings and when they fail they don’t want to take any responsibility. What message does that send out to people about the wisdom of saving for one’s old age?...
Equitable Life pensioners are often presented in the media as a bunch of well-heeled lawyers, doctors or judges, but this is a myth. EMAG (Equitable Members Action Group), of which I am a member, has calculated that the average pension pot was £46,000 before the cuts – that will buy you a pension of less than £70 a week...
EMAG tells me that in 2001, the Government were on the brink of bailing out Equitable Life to the tune of £5 billion, at the time, Howard Davis, said that to do so would be to admit that regulation has failed! Breathtaking. Prompt action then could have saved much of the pain and misery that has been caused to victims of the Equitable over the last nine years and who knows, if they really had learned their lesson at the time, we as taxpayers might have been spared the subsequent bailouts of the failed banks - Northern Rock, RBS and HBOS. And why should we get nothing for the failures of UK regulators when they can find £5 billion to rescue savers with Icesave – a foreign bank that wasn’t even regulated in this country?...
What makes me so angry is that we had regulators who were supposed to watch over the interests of hard-working people who put their cash into Equitable. They are responsible for ruining thousands of lives - why aren’t they in prison? I bet they’re all right, I’m sure their pensions aren’t affected. And yet the people who did the right thing - who tried to provide for their old age - get thrown to the wolves...
Meanwhile the Treasury continues to show contempt for the Parliamentary Ombudsman and to delay and delay. Instead of a proper transparent Tribunal we are stuck with this means-tested ex-gratia payment scheme. We don’t know how much will be paid, to whom it will be paid or when it will be paid. I want more than warm words of reassurance from the minister - I want proper compensation for the wrongs that have been visited on us by a decade of regulatory failure. I’ve lost all faith in pensions, savings and the banks...
Is it right that reckless bankers are rewarded for gambling with our money with obscene bonuses underwritten by taxpayers’ money when responsible people who tried to provide for their old age are being left to twist in the wind? And what is the point in having a regulator if there is no accountability when things go wrong?
My challenge to Gordon Brown is this: if you really want people in the UK to save for their old age, do the honourable thing now by delivering proper compensation to the victims of the Equitable Life scandal before it’s too late."
Honor Blackman, Sunday Telegraph 22 November, 2009
