Charles Thomson Radio 5 Live interview on New Year's Eve
"Guy: The trouble is, the good performance of the stock market this year doesn't do you ANY good at all, does it?
CT: I'm afraid that's right. The economic downturn of the last three years has meant that our policyholders have suffered the downside and have a very limited upside to look forward to.
We actually sold out of most of our stocks and shares when the market was certainly above 4600 and, therefore, the further downside, and the upside that's happened so far, are things that our policyholders were protected from anyway.
Guy: What about the comments you were making a short while ago about there being a possibility that there might be other claims made against you? You recently added more provision to the fund that covers those sorts of things just in case of that outcome?
CT: We can't know what's going to be in the Penrose Report. There is an outside possibility that that generates other claims against the company. We don't think that is particularly likely but it is a possibility that we felt we had to take into account and be open about.
Guy: And, just a final thought, Charles: I never really understood whether there's any possibility at any stage of Equitable becoming, in terms of the way it invests its funds, more dynamic again - or does it have to stay FOREVER super-safe, super-conservative?
CT: Well, I think my original ambition for the company was that it was possible to restore it to some measure of health and the economic downturn, particularly over the last couple of years, has taken that possibility, very substantially away and it's now extremely unlikely that much can be done to recover it.
Guy: A rather depressing note from Charles Thomson, chief executive of Equitable Life, to end on."
For a transcript of the whole interview, see: http://www.cookham.com/community/equitable/emagtinterview.htm
"Equitable Members' Action Group believes the priority should be given to policyholders who stayed with Equitable after it closed to new business but saw 16 per cent cuts in the value of their funds in July 2001. Policyholders who fled earlier had been paid inflated returns because Equitable had, for years, consistently declared bonuses it could not afford.
The insurer was one of the most popular in the business and its demise has profoundly shaken confidence in the personal finance industry and in pensions as a form of investment. The Government has the opportunity to draw a line under the whole miserable business by publishing the Penrose report in full and - if expectations about its findings are correct - opening its mind to a compensation package.
There will be protests from people who feel that their taxes should not go towards such a fund. But the majority will benefit by assisting a minority if compensation helps to restore investors' confidence. As one Equitable member put it last week, the people who invested with the insurer put some of their taxes towards paying for government regulation that failed. They have a right to redress. Equitable policyholders should not have to see in another new year waiting to have that right fulfilled."
Maria Scott in the Observer
"Equitable mauling for watchdogs: SCOTTISH judge is poised to strike a blow for compensation for the victims of insurer Equitable Life.
Judge Penrose's report is expected to criticise the Department of Trade and Industry and other watchdogs who snored during Equitable's long slide from over-distribution to near collapse.
The report may be lodged with the Treasury as early as today. Had it been lodged earlier, a statement to Parliament might have been needed, but Parliament has shut down for Christmas.
It is not in Penrose's brief to recommend compensation but he is expected to take a dim view of regulators' performance over the years in which Equitable paid out big bonuses on the basis of reserves that proved inadequate.
One source said: 'The Government will come under significant pressure to write a big cheque'.
Brian O'Conner in the Daily Mail Friday 19th December, 2003. See: http://www.thisismoney.com/20031219/nm72074.html
"The Ombudsman added, however, that the investigation had highlighted a specific issue that she wished to draw to Parliament's attention. That was the apparent mismatch between public expectations of the role of the prudential regulator and what the regulator could reasonably be expected to deliver.
It was never envisaged by those who framed the legislation establishing the regulatory regime that it would provide complete protection for all policyholders. The emphasis was on a "light touch" approach to regulation and the avoidance of over-interference in a company's affairs."
The press release accompanying the Parliamentary Ombudsman's report into Equitable Life 30th June, 2003. Click here.
(About the Society's dialogue with politicians):
"Charles Thomson has just written to every constituency MP updating them on the Society's current corporate position and the remaining issues it faces. This is the second update this year and MPs, including the Prime Minister, have informed us how appreciative they are for the Society keeping them informed.
Vanni Treves, Charles Thomson and I again met with Ruth Kelly and her advisers at the Treasury last month to discuss a number of current matters…….. We have met with other Cabinet ministers this year too.
Earlier this year, Charles also presented to the All Party Pensions Group at the Commons and took questions from its membership. It was a very well received presentation and MPs appreciated Charles' attendance. We are likely to meet with this group in the New Year again.
We have met/telephone briefed Vincent Cable, the Lib Dems front bench Treasury spokesperson and main ELAS "watcher" several times this year, to give him updates ahead of the Commons debates on ELAS.
We have met with Norman Lamb twice this year. Charles and I were due to meet with Stephen O'Brien before his move to the DTI brief in the recent Tory frontbench reshuffle. A meeting with his successor, Andrew Tyrie, is being organised for the New Year. Any MP that contacts or writes to the Society is dealt with swiftly and, where appropriate, we will arrange to meet with an MP."
Tony McGarahan, Head of Corporate Communications of Equitable Life in a letter to EMAG, 9th Dec, 2003
"Ann Abraham, parliamentary ombudsman, was treated with kid gloves when she appeared in front of the public administration committee on Thursday to answer questions relating to her report on the Equitable Life affair, which in effect ruled out any prospect of compensation for long-suffering policyholders on the basis of regulatory failure.
MPs were frustrated in their attempts to hold the ombudsman to account because of pending legal action, which she said constrained her ability to answer questions.
The action has been brought by the Equitable Members Action Group (EMAG), which has made an application for a judicial review of the ombudsman's report, published in July, questioning the legality of her decisions. EMAG maintains that the matter should not have prevented the ombudsman answering questions because there is no active claim as yet."
"Ned Cazalet, insurance industry analyst, says Equitable members are likely to suffer further pain in the years to come with members who are unable to quit feeling the brunt of the pain.
"Equitable Life is shrinking and shrinking pretty rapidly. People are leaving the society more quickly than pensioners are dying, which leaves a smaller fund to pay the bills."
He also points to the recently-posted accounts for potential icebergs ahead. "The firm says it has debts that are not owed to anybody, called subordinated debts. Of course they owe this money. That is what a debt is. Then they have booked future profits in the current accounts, which is fantasy accounting."
Mr Thomson says the board recognises there is more potential for the situation to deteriorate than to improve since the insurer was forced to sell its equities and buy bonds. A major improvement is only likely to follow successful lawsuits."
"Mr Thomson says there are two areas that might provide further growth in the funds. The first is that the fund could benefit if it were to succeed in its legal action against Ernst & Young, the former directors and ex-auditors. The trial is expected to open in April 2005. The second possibility is that the massive provisions Equitable has set aside against mis-selling claims will be overestimated, allowing it to claw back cash from its reserves." (Note: No reference to government compensation.) Antonia Senior in The Times, Sat 15th Nov, 2003
"Events at this institution - whose name was once a byword for financial prudence - have had a huge influence on attitudes towards saving and investment. It is nearly three years since Equitable closed to new business and, although the report from Lord Penrose's investigation is almost complete, the government has given no commitment about when, or in what form, the report will be published. Treasury Minister Ruth Kelly hinted last week that nothing might be done for some time.
If the outcome of this lengthy, expensive investigation is anything other than prompt publication in full, it will appear there has been a cover-up. This will confirm small investors' suspicions that the financial and political establishments automatically close ranks when awkward questions are asked.
The whole country, not just Equitable investors, is owed an explanation of how the company was brought down, no matter how ugly the details." Maria Scott in the Observer 9th Nov, 2003
"Treasury will be effectively forced to pay compensation to Equitable Life policyholders if the Penrose inquiry into the assurer recommends this should be done, ministers have privately admitted.
But the government yesterday refused to be drawn on whether it would pay out if - as many expect - Lord Penrose criticised the state for regulatory failures but remained silent on compensation." Jean Eaglesham and Andrew Bolger in the Financial Times
"Life appears to be just as tough in his new job for Sir Howard Davies, the former head of the FSA who is now the director at the London School of Economics.
Yesterday saw his debut address to the Students' Union, but before he could open his mouth he had to win a vote after a poster campaign by those pesky Socialist Workers attempted to persuade other students to gag him.
"Howard Davies was previously head of the FSA," the posters said. "This body was established to regulate the provision of financial services in the UK, but it presided over the Equitable Life pensions scandal. It was condemned as 'asleep on the job' ... vote against Davies speaking in the Union meeting."
An unusually fair point……" City Diary in the Daily Telegraph, 24th October, 2003.
If you had a £3 billion suit hanging over your head, would you have volunteered evidence to Lord Penrose? Only a full trial will ensure that the truth will finally emerge, through witness statements, testimony and cross-examination. The truth, above all, is what is owed to impoverished annuitants, policyholders and the public. At least in court the long, controlling arms of the Treasury wont be able to preserve its Machiavellian wall of secrecy and hide its own culpability. Paul Braithwaite, general secretary EMAG press release 21st Oct, 2003
From Vanni Treves to EMAG, 14th October:
Thank you for your letter dated 19th October, enclosing EMAGs Statement
of Grounds for a Judicial Review. Acts of courtesy and goodwill are welcome
from anyone, but especially from EMAG. I shall read the Statement with interest,
as will various of my colleagues. Click
here to view the letter sent to the Board
Equitable Life's former board closed their eyes to the financial
disaster facing the society and shut their minds to contingency
plans that could have eased the problems, it was claimed in the High Court yesterday.
The allegations were made as Equitable's existing board continued its fight
to stop a £3.2 billion negligence claim against nine former non-executive
directors from being struck out.
Iain Milligan QC, acting for Equitable, told the court: In 1998 the board
agreed it was satisfied that appropriate action was being taken with regard
to the impending legal action [which resulted in the society's near collapse].
It should not have been. The board knew they were betting the farm and
closed their eyes to what they should have been doing to protect their position.
'closed their eyes' to disaster By Tessa Thorniley 26th Sept, 2000
(Of Sir Howard Davies, retiring this week.) This brainiest and most loquacious
of Britain's battered class of public servants is exiting with two fingers waggled
at the politicians and consumer groups who believe it's the job of the financial
regulator to prevent anyone from losing a bean on any investment: "My last
act will be to publish a paper in praise of failure," he says, and then
bellows with laughter.
My view is that it is little short of miraculous that there have been no major
disasters along the way (although there are politicians and policyholders who
will never be persuaded that the FSA's stewardship of Equitable Life, the collapsed
life insurer, was acceptable).
But does he acknowledge that anything went wrong? "I think we probably
underestimated the problems there were in the insurance sector. We overestimated
the robustness of the regime we were inheriting.
His other concern was that insurers did not pay the kind of respect to the
regulators that banks showed to their supervisors. "The Equitable example
is quite an interesting one," Davies says. "The Equitable decided
to go to court to test the guarantee thing [whether it had to honour financial
promises to a particular class of policyholders]. And they did that without
discussing it with the supervisors.
As for his departure from the FSA
.. "I don't believe in that stuff.
I'll pack up at six o'clock and go away. Never apologise, never explain."
From Robert Pestons interview in the Sunday Telegraph 14th Sept, 2003.
Extracts from conclusions of a critique on the Parliamentary Ombudsmans
2.The handling of this one complaint out of over 500 had no relation to natural
justice and the report fails to show it has dealt with all the complaints raised.
3.The PO talks of freedom with disclosure. At no time did ELAS make any attempt
to disclose the true position of its finances and the Prudential Regulator did
nothing effective to encourage such disclosure.
4.2 There was maladministration in: Failing to take any action at all between
the Court of Appeal and the House of Lords judgments when an effective intervention
in the public interest and that of the insurance industry on the subject of
ring-fencing would have been of the greatest importance.
5.The report is entirely one-sided with the Treasury and the FSA being allowed
to rewrite history.
All in all the role and performance of the PO are called into question and one
wonders whether she serves any useful purpose. Nicolas Bellord, retired
- p>McKechnie argues that financial services is the most imperfect market
in contemporary Britain.
." Even Howard Davies [ex-head of the FSA]
at his retirement speech asked 'When is this industry ever going to learn?'
"The Association of British Insurers said to the FSA: 'We can't have another
mis-selling scandal, so please define what mis-selling was.' What other industry
would find the suppliers sitting there saying: 'What can we legally do to rip
off our customers and when will you stop us?' "
McKechnie is firmly of the opinion that "the financial services industry
isn't going to change until it's forced to". And forcing change is clearly
at the top of her to-do list. "What's needed is a very different form of
regulation to what we have at the moment - not more, but different.
"We think the regulatory framework is not the right one.
So should there be a separate regulator, a regulatory equivalent to the consumer-facing
CA? "We're coming to that view, yes." McKechnie insists that consumers
need a champion within the regulatory system, a body without a conflicting duty
"For example, the FSA has largely concentrated on keeping the Equitable
afloat because it's been concerned about the knock-on effects this [its failure]
would have on the industry. "It's been much less concerned about getting
appropriate value and giving advice to consumers. Throughout the whole Equitable
debacle we couldn't get anything from the FSA about what consumers should do
[or any] advice about the best way forward." - Dame
Sheila McKechnie (director of the Consumers Association) interview by
Martin Baker in The Daily Telegraph 1st Sept, 2003
PITY the millions of savers in with-profits funds. The schemes form the
backbone of many of our pensions and mortgages, but they are in a state of terminal
decline. Chapmans* analysis is pretty harsh. He thinks savers face
the grim prospect of continuously falling payouts. They may also suffer
institutional exploitation as funds that are closed to new business
cut bonuses or hike exit penalties. In other words, you are damned if you stay
in and damned if you pull out of your with-profits contract.
Several firms, including Equitable Life, Royal & Sun Alliance and Pearl,
do not accept new business. But a closed fund has to pursue a safer investment
policy and returns are therefore likely to be lower. To prove the point, five
out of seven with-profits firms with closed funds cancelled their annual payouts
altogether last year.
The with-profits industry has turned obfuscation into an art form it
calls an exit penalty a market-value reduction so you will never get
a straight answer from your insurer. In fact, its a formidable task to
extract basic information, such as how much your fund would be worth if you
kept up the premiums until the maturity date. But if you can bear it
and you are not too close to retirement its time to seriously consider
jumping ship. It may be the only way to keep your finances afloat. Naomi
Caine in The Sunday Times 24th August, 2003
*John Chapman is a former senior official at the Office of Fair Trading.
When the Pensions Ombudsman is forced to report that cases of maladministration
and fraud go uninvestigated because of the constraints under which he has to
operate, the Government must take note. In the wake of the Equitable Life fiasco,
ministers must realise that pensions problems need to be dealt with speedily.
The public sector job creation scheme is giving us thousands of expensive and
Here it seems there may be a case for increased public sector employment in
a worthy cause. Putting money into property can be a sensible way to save, but
it is best to have a spread of investments and pensions schemes should figure.
But they must be properly policed. Patience
Wheatcroft editorial in The Times, Saturday 16th August, 2003
AN Equitable Life victim is contemplating seeking a partner through the
Lonely Hearts columns. His advertisement will not make
the usual request for a slender blonde with GSOH. Instead, he will be open-minded
on size and colouring, his sole stipulation being: Public sector pension
As the joys of a defined benefit pension scheme are denied to an ever-increasing
number of workers, those who can look forward to their final salary-linked pension
are increasingly envied. Patience
Wheatcroft - The Times, business commentary column, 9 August '03.
(About Stewart Simpson - Mr P - the sample case considered by the Parliamentary
Ombudsman): Stewart's case was rejected by the ombudsman who said he should
have been perfectly well aware of Equitable's problems when he took out the
annuity. Abraham said: "After all the publicity surrounding Equitable's
high-profile court case and the subsequent decision to put the company up for
sale, I would have expected potential investors to have sought independent financial
advice before investing in Equitable."
Stewart was incensed. He said: "When I decided to retire in April 2000,
the court case had not taken place. I went through Equitable's accounts from
1990 to 1999. Those for 1998 and 1999 were not qualified in any way. I wouldn't
have gone near the place if I'd had any inkling of the truth."
Dolan, Personal Finance Editor of Sunday Telegraph 3rd Aug, 2003
"... I want to buckle on my sword, pull down my visor, leap on the nearest
charger and kill whoever it was that turned the Equitable Life pension company
from the safest, sturdiest, vermin-proof nesting box into the equivalent of
a paper-bag shoved down a weasel-hole. Or burrow or earth or wherever weasels
I have just had the usual annual letter from Equitable Life advising me how
much less my pension is now worth than this time last year. It came in a big
envelope with one of their annual reviews which, with Kate Moss on the front,
could easily have passed for Vogue. How can an organisation on its uppers afford
such glossy opulence. A couple of A4 sheets held together with a paperclip would
have been more appropriate..." Sue Arnold in the Independent 19th July,
"The action groups muster, fragment and regroup in factions destructive of more than 200 years of soundly based mutuality. The few active members of action groups hope for compensation from the government, from the former board, from the auditors and many from each other via claims against the society's single fund. Some of the claims are mutually exclusive; most are hopeless." Letter to the Financial Times, published 19th July.2003 from Peter Martin, ex vice-president of The Equitable Life at the time of its closure. He was appointed to the board in 1984 and held the responsibility of deputy-president from 1990.
"This is not Nigeria or Russia. We are not in a free-for-all, Wild-West
Regulators exist to ensure that the main financial institutions are managed
soundly and that mis-selling is prevented. And in this case both of these faults
occurred on a very severe scale. What we are now being told is that, even if
the Government makes an absolute Horlicks of its regulation, nobody is responsible
and nobody is going to pay." Vincent Cable to Jeremy Paxman on BBC 2 TV's
Newsnight on 1st July, 2003 about the Parliamentary Ombudsman's report.
"During the course of nearly 120 pages of self-serving waffle, Abraham
makes the astonishing observation that "it was never envisaged that (the FSA)
would provide complete protection for all policyholders... This, says Abraham
in all seriousness, was a philosophy "firmly grounded" in a "LIGHT TOUCH" approach
to regulation... In other words, the millions of people who believe that the
Government is keener to protect their life savings than to encourage marketing
departments to flog products are simply being naïve.
Her flat refusal to investigate events in the 1990s, even before she knew what
is in the Penrose report, was frankly weird. Not to say suspicious... ...by
restricting her investigation to a period when the real mistakes had already
been made, Abraham was then able to exonerate the least culpable regulator,
while comfortably ignoring the behaviour of the real offenders." Liz
Dolan, Personal Finance Editor Comment column Sunday Telegraph 6th July,
Crisis in the pensions industry: "Am I alone in thinking that it's
about time we started behaving a bit more like the French when anything threatens
our status quo? Witness the recent French strike and street protests over pensions.
We have seen the imposition of tax on pension fund profits, the Equitable Life
debacle and the disastrous future for many of us - about 12 million people -
in defined occupational pension schemes, who, having paid into schemes for years,
can no longer look forward to anything near the expected returns.
And what has the Government done about it? Nothing. It simply heaps on more
misery by increasing national insurance contributions. The pensions minister
hasn't even been replaced. At the same time, I am incensed to learn that £25
million in taxpayers' money is being used to plug a hole in the MPs' pension
It is an outrage the public needs to shout about. What small shareholders did
to company fat cats, the citizens can do to our leaders. Off with their heads
and let's have a day of protest, I say. Gillian Burrows,Scarborough, Letter
to the Times 17th June, 2003
"That this House notes the forensic study of the Equitable
Life's accounts by accountants Burgess Hodgson, which revealed a £1 billion
black hole in the Society's finances at the beginning of the 1990's; also notes
that the report demonstrates the Society's management consistently voted bonuses
so that its liabilities were in excess of its assets; is concerned that the
financial information available to Burgess Hodgson was also available to the
regulators at the time; notes that many pensioners a re currently suffering
financial hardship because of the Society's mismanagement and an apparent failure
of the regulatory system to protect policyholders; and calls on the Parliamentary
Ombudsman to immediately investigate the complaints of maladministration relating
to the period before 1999 that have been referred to her by many honourable
Members on behalf of their constituents." Parliamentary Early Day Motion
(EDM) 1337 has been tabled by Dr Ian Gibson (Labour MP for Norwich North) on
4 June 2003.
"The Government-commissioned report on what went wrong at Equitable (Penrose
Inquiry) is running late, but Ministers will be in no hurry to deal with it.
Equitable campaigners fear attempts to suppress the report because, they believe,
it will be impossible to escape the conclusion that Government regulators failed.
The Government should surprise Equitable's long suffering investors by preparing
to draw a line under the Equitable affair. If this means paying compensation,
do so. Yes, all taxpayers will ultimately pick up the bill, but that is part
of living in a democracy. Something went hideously wrong at Equitable Life,
and it is in everyone's interests that we sort it out and move on." Maria
Scott, Personal Finance Editor of the Observer 1st June, 2003
Para 28 of the FSA Press Release Dec 10th, 2001, endorsing the proposed compromised
which resulted in 2.5% non-guaranteed uplifts to all nonGAR policyholders, including
late joiners. To be read in the context of the Financial Ombudsman Service's
adjudication on May 23rd, 2003 AGAINST the Society for misrepresentation and
mis-selling to all categories of late-joiners and recommending compensation,
but only to policyholders who left. "Certain policyholder groups have argued
that they are in a materially different position to the generality of non-GAR
policyholders who have possible mis-selling claims. They include with-profits
annuitants, the so-called late-joiners and overseas policyholders. We have considered
whether those or other policyholders constitute separate groups with sufficiently
different interests which justify different treatment. We have concluded that
the Compromise does not give these groups of policyholders disproportionately
greater benefits or disbenefits." Well, the FOS disagreed. (28 May '03)
On whether the inquiry by Lord Penrose, due to report in July, would give ammunition
for the Society to sue the Government or the regulators, Thomson said: "I
think it is very improbable. As I understand it, the legal test is misfeasance
in public office - not simply that they misregulated us but that they meant
to misregulate us. That is asking an awful lot. But I suspect that Penrose will
find evidence of misregulation."
[Of Charles Thomson]: " But of more concern to Thomson was his workload.
"I found myself chief executive, finance director, appointed actuary and
chief operating officer, and that was not very comfortable. I had to build a
team that could cope with the obligations.
No wonder he is forthright about his salary, now £371,000, after a £522,000
payment including bonus for the first year. "Our policyholders have had
a torrid time, but I don't actually think it would be right for me to be paid
half the going rate, because otherwise why should I do it? I hope I am worth
the money and if I am not I should not be here." Simon
Bain, The Herald 9th May, 2003
"Equitable Life's policyholders will no doubt bristle when they learn
of chief executive Charles Thomson's escalating salary - receiving £679,288
in 2002 compared to the £347,758 for the 10 months he worked in 2001.
He voluntarily waived half of his £82,500 annual bonus for last year,
which is to be applauded. However, most policyholders would surely argue that
he has more than made up for this elsewhere in his remuneration package.
The UK's oldest mutual life assurer saw directors' pay treble last year compared
to 2001. Equitable's long-suffering policyholders have enough worries about
their future benefits without seeing their retirement nest egg being carried
off by the board." Business
Comment in the Herald, 2nd May, 2003 http://www.theherald.co.uk/business/archive/2-5-19103-22-53-51.html
Of chairman Vanni Treves: "With the active support of the FSA, with a compliant Ombudsman and with his tame legal opinions he has for the most part fully achieved his aim of "divide and rule". Whatever one may think of him personally, he is surely earning his knighthood from a grateful government." Brian Potter of Dorridge on Motley Fool 18th April, 2003
"We think there's a contradiction at the heart of the FSA between balancing the interests of keeping the companies afloat and protecting the individual consumer and making sure the consumer gets the rights that they should have. What they really need to do is have a revolution from top to bottom in that place (the FSA), that puts the consumer at the heart of the agenda." Dame Sheila McKechnie, Director of Consumers' Association on Money Box, 15th April, 2003
" JUST TOO GOOD TO BE TRUE: The Equitable Members Action Group (EMAG) alleges that the insurer operated like a pyramid scheme during the Nineties, making overly generous payouts to customers who retired or transferred. These payments were funded from the money invested by newcomers. In a Ponzi fraud (Named after the notorious Twenties swindler Charles Ponzi) the new victims of a fraudulent investment scheme support the returns made to the early investors. The Treasury has the right to withhold full publication of the Penrose report. The latest accusations make this veto even more unacceptable. The least that Equitable Life investors deserve is the truth about what really happened at the company. Anyone who never had anything to do with Equitable may now be suffering a certain fatigue at the affair. But we should all care that a company charged with the responsibility for long-term savings was run in such a deplorable fashion." - The Times Personal Finance Editor, Anne Ashworth, 4th April, 2003
"I won't leave Equitable in the lurch, says Treves.
He told The Times: "The clouds are lifting all the time. Whereas two years ago we were in a permanent typhoon, on a good day now, it's no more than drizzling."
Mr Treves pledged to resolve two outstanding issues before he will leave Equitable Life. The first is the society's response to the Treasury sponsored Penrose report into the circumstances surrounding the insurer's near-collapse, due to be published in the next few weeks. The second is to resolve a multibillion-pound lawsuit against 15 former directors of the society, and Ernst & Young, its former auditors.
Mr Treves said that the insurer would prefer to leverage compensation out of the Treasury through "moral persuasion" by highlighting its responsibility for any regulatory failings thrown up by Penrose.
The Penrose report could be a minefield for Equitable, throwing up new classes of policyholder who might have a case to claim against the insurer for losses.
But the Equitable board has also taken two key decisions. The first was pushing through a compromise deal to settle competing claims from different classes of policyholders. The second was to move the with-profits fund out of equities and into fixed-income investments. Mr Treves's preferred plan is to sell or merge the company, a move that would bolster the insurer's balance sheet and open the way for it to return to equity investments."
Interview by Antonia Senior in The Times, 9th Jan 2004