Quotes - 2004
From the executive in charge of the new Investigation by the Parliamentary Ombudsman (PO 2), Iain Ogilvie:
"I think in terms of this investigation (PO 2), we might say that the regulators would have been maladministrative:
1. had they failed to do something that they were required to do or had they done something that they should not have done; and/or
2. where discretion was given to them, had they acted unreasonably given the information available to them at the time.
The first is an absolute test - did the regulators break the regulatory rules contained in statute law, secondary legislation, professional guidance and any other sources of the regulatory regime?
The second is effectively a reasonableness test, which will require the Ombudsman to look at each discretionary decision or action on its own merits and to assess it against what, in her view, is reasonable. It is here that the issue of hindsight is most relevant.
The part of the investigation in which we are working to set out the powers, duties and responsibilities of the regulators over the whole period is thus a critical process in determining whether maladministration occurred.
A personal post by Iain Ogilvie on The Motley Fool Dec 22
Click here to read the whole text by Iain Ogilvie.
Equitable members drop review: "Equitable Life's largest action group has dropped its call for a judicial review of the Parliamentary Ombudsman's first inquiry into the society's near-collapse in the late 1990s.
The Equitable Members Action Group (Emag) said yesterday that Ann Abraham, the Ombudsman, had met "almost all the concerns which caused us to resort to litigation last year". Disgruntled former and existing members of Equitable Life had claimed that Ms Abraham's 2003 report into the society was "fatally flawed".
In the report she cleared the Financial Services Authority of failing in its regulatory duties to the society between January 1999 and December 2000. The members wanted the findings overturned in the High Court and complained the investigation had been too limited.
However, Ms Abraham has recently launched a much broader inquiry into Equitable to investigate whether the Treasury or the Department of Trade and Industry was guilty of maladministration when it regulated the insurer.
Colin Slater, chairman of Emag, said: "We believe both parties' resources are better applied to the new investigation, which would never have happened without Emag's persistence."
Tessa Thorniley 6 December, 2004 Daily Telegraph
Extracts from a letter (25 Nov, 2004) to all MPs from Ann Abraham (the PO) on the set-up of the second enquiry into ELAS:
"I have put in place a dedicated team of investigators, led by Iain Ogilvie, to undertake the investigation. The team's contact details are provided at the end of this letter.
......we have taken possession of the entire Penrose Inquiry evidence archive and also obtained other relevant evidence, including the policy and operational files of the Principal Civil Service Pension Scheme administrators for whom Equitable Life provided an additional voluntary contribution scheme.
......the investigation team has met with four policyholder action groups to discuss the selection of individual representative complainants and the terms of a statement of their complaints, which will be issued to the bodies under investigation for their formal response. These discussions are at an advanced stage and we hope to be able to finalise and issue the statement of complaint within the next week.
I do not propose that the investigation should have a specific start date, although it must conclude with 1 December 2001 as from this date I have no jurisdiction over the regulators of Equitable Life.
There is... ...no need for individuals to register their complaint with me in order to be covered by the outcome of my investigation, although we are happy to receive further referrals, which would be held on file pending the outcome of the investigation.
We... ...hope to complete the investigation during 2005 and we will do everything we can to ensure that we do so in the shortest time possible.
I hope to be able to publish relevant information about the investigation, including the statement of complaint once agreed, on my Office's website in the near future and will keep you informed of further progress."
The enquiry contact details: Tel: 0207 217 3904 Fax: 0207 217 4160
See also Financial Times, Andrea Felstead 26 Nov, 04
"Inquiry fatigue: Ann Abraham, the parliamentary ombudsman, is to investigate claims that the government misled workers over the security of final salary pension schemes, raising hopes of compensation for those who subsequently lost out when the schemes were wound up.
Given, however, her earlier reluctance to blame the government over its regulatory failures in the Equitable Life saga and the way she had to be strong-armed into re-opening her inquiry after the Penrose report, perhaps those workers should not hold out too much hope.
Furthermore, if governments are to face ombudsman inquiries every time they mislead people, Ms Abraham is going to need a few more staff."
By Robert Shrimsley. Financial Times. November 18 2004
"Pensions fund too small, says government adviser
The money earmarked by the government to help members of insolvent pension schemes will cover only a small fraction of those harmed, according to an adviser to the prime minister.
Ros Altmann, an expert in pensions economics, warned on Tuesday that the sums allocated to the Financial Assistance Scheme (FAS), designed to help at least 65,000 members of under-funded pension plans left stranded when their employer became insolvent, will provide aid to no more than a handful.
The £20m a year which the government had pledged over the next two decades would buy average UK pensions of £6,000 per year for only 135 people going by today's cost of annuities, Ms Altmann said.
Pensions policy has become an increasingly divisive issue between Tony Blair and Gordon Brown.
The chancellor on Tuesday told delegates at the annual conference of the CBI employers' organisation in Birmingham the government could not give further commitments to pensioners without the risk of raising taxes.
The chancellor has championed means-testing to redirect wealth to the poorest pensioners but he is under pressure from cabinet colleagues to consider shifting towards a universal scheme."
By Norma Cohen and Jean Eaglesham in Birmingham November 9 2004
"Life gets better at Equitable:
EQUITABLE Life, the troubled insurance group, today launched an offer to buy in up to £260m of its bonds.
It is positive confirmation that chairman Vanni Treves was not simply whistling in the wind when he wrote in the annual report that the storm clouds were slowly beginning to clear.
This therefore amounts to the most positive sign of a return to more-normal conditions that the hundreds of thousands of people with Equitable Life policies have seen for many a year.
The other thing worth noting is that the Financial Services Authority would never have sanctioned this offer were it not also fairly convinced that the worst of the society's woes were behind it.
This means that the Penrose Report on Equitable's problems cannot have set off a further wave of claims for damages or mis-selling of sufficient weight to threaten the society's stability. That was the last real shadow left over the group.
All credit, therefore, to the salvage operation done by the Equitable management team. The business now looks at last as if it is going forward again."
Anthony Hilton, Evening Standard 4 November 2004
"Threat from Equitable Life chairman: Equitable Life has issued a bold threat against its former auditor Ernst & Young.
In a statement made yesterday, chairman Vanni Treves said he was willing to 'ruin E&Y or the livelihoods of its partners and their families'.
'Based on the legal advice the Board has received, we have a very powerful case against E&Y and we are preparing for trial next year,' he said.
'The Board has a duty to act in the best interests of policyholders and if E&Y wants to pick up the phone to talk about settlement, then, of course, we will listen. But for my Board to consider settlement, any offer from E&Y must be sincere, serious and substantial. Otherwise we will see them in the High Court.
'We are reasonable people and, obviously, we do not want to ruin E&Y or the livelihoods of its partners and their families unless we have to.'
29 October '04 - Accountancy Age
Nanny is off her rocker
"…………you can't work out what Nanny wants at all. She nags you to save for a rainy day, then raids your piggy-bank.
She urges responsibility and tells you to work until you're 70, but then you wake up one morning and find that she has installed a high-prize fruit machine in the nursery, and with a leer and a wink she encourages you to play for high stakes.
When you have duly emptied your piggy-bank, through the nursery door you spot a seedy-looking man with his hat on the back of his head counting out grubby fivers into Nanny's outstretched hand. Noticing your wide little eyes, she taps her nose and growls: "Inner-city regeneration. Culture, see? Go to bed."
The jar on the mantelpiece containing herown pension savings grows ever heavier. But before you can say anything, Nanny is on her high horse, scolding you for financial improvidence."
Libby Purves, in The Times 19 Oct 2004
"I love the comment in the Pensions Commissions report that people do not make rational decisions with regard to their pensions.
Who, when they made their pension arrangements, expected the Government to steal 30,000 million pounds from pension dividends over a mere seven years?
Who expected the rules to be changed so many times that now even the experts struggle to make sense of pensions?
Who expected 66 separate stealth taxes to eat away at their disposable income - and for pay to rise within the State sector whilst remaining essentially static in the wealth-creating sector?
Who expected the Government to devise one set of rules for themselves and another for those in the private sector?
Who expected to have to pay for so many things out of remaining disposable income which were once funded from taxes - education and dentistry to name just two - and to receive such little value for so much money legally stolen from pay packets?
Who expected house prices to rise so quickly that loans are made against multiples of income that were unthinkable twenty years ago?
Who expected so much of the financial services industry to be so venal and such poor value for money?
Who can define "rational decision" in today's world of lies, spin and broken promises?
Why is all of this somehow our fault?
"Thomasm1964" on Motley Fool Pensions Board 14 Oct, 2004
"CHARLES THOMSON, the Equitable Life chief executive, yesterday hoisted again a for-sale sign over the troubled mutual society. Mr Thomson raised the prospect of a sale as he unveiled figures for the half year to June 30 showing that there had been a slowdown in policyholders fleeing the group.
He added that the figures proved that Equitable was more attractive as an acquisition target than the last time it was up for sale four years ago. "We're open to any route that's in the interest of policyholders (and) it's certainly something we'd look at. Nothing is ruled in and nothing is ruled out."
Equitable is conducting a strategic review of its options for the future but has not set a completion date. Any decision made would be in keeping with the board's "overarching aim to maintain stability and certainty for policyholders and ensuring there is a smooth run-off", the chief executive said.
In July Resolution Life, a company set up by Clive Cowdery, the former chief executive of GE Insurance, and backed by institutional investors, paid £850 million for Royal & SunAlliance's (R&SA) closed life business. R&SA UK Life had been closed to new business since 2002.
Equitable Life had previously maintained that, once the court cases against its former auditors, Ernst & Young, and ex-directors were over, and the numerous inquiries into its near-collapse were complete, it would reopen for business.
"A lot of buyers like these businesses with the skin on, so to speak, with all the bits, and Equitable doesn't have them any more," said Ned Cazalet, head of Cazalet Consulting.
"At the moment it looks like a pub five minutes to chucking out time - a pretty rowdy sort of place that looks scary to a bidder," he said.
28 September '04 Christine Seib in The Times
"Blair's big pensions opportunity: The government has woken up to the fact that its pensions policy is a mess. More than that, it is a mess that risks alienating not just Old Labour allies in the trade unions, but also the fabled middle classes of middle Britain. Worse still from Mr Blair's perspective, the Conservatives and the Liberal Democrats have been making the intellectual running in coming up with answers.
But then came the scandal of Equitable Life, the slump in equity prices, the closure of many final salary schemes to new entrants and, most recently, the realisation that corporate bankruptcies can leave even the most thrifty citizens penniless in old age. The comfortable assumptions of the late 1990s - when Mr Brown felt confident enough to squeeze another £5bn a year in tax from pension funds - have been shattered. Stakeholder pensions have flopped, most people are not saving enough, and because of means-testing those on relatively low incomes have little incentive to do so.
Translate all this into politics and it means a new wave of voter insecurity - not just among the less well-off but among those who had assumed that decent jobs and a lifetime of saving offered a gold-plated guarantee of comfortable security in retirement. Some time soon, all these voters are going to start blaming the government."
Philip Stephens in the Financial Times, September 14
"On the one hand, there is Mr Blair, a Tory Wet with a Leftish contempt for our traditional institutions. On the other is Gordon Brown, a Scottish socialist whose only conservative act has been to make the Bank of England independent.
The sphere of public policy where these two opposing philosophies collide with the most destructive effect is the one covered by Mr Smith: pensions. Here vicious political enmity has resulted in a slow-burning crisis. For, after seven years of meddling, endless reports, millions of pages of forms, a £5 billion tax rise, the collapse of Equitable Life and several computer fiascos, Labour has turned our well-funded pension system into a matter of great worry to every household in the land.
It is tempting to blame Mr Brown - Mr Smith is, after all, one of his cronies - but Mr Blair also deserves criticism for arrogating such a vital area of policy to his Chancellor.
Having parted company with Mr Smith, let us hope Mr Blair will have the courage to appoint a new pensions secretary who is not an acolyte of Mr Brown. Instead, the country needs someone with an understanding of this vital but complicated subject. Mr Smith's successor should start by scrapping the pensions Bill currently stuck in the parliamentary system, abolishing the tax on dividends imposed by the Chancellor, and tearing up the means tests that manage both to discourage saving and to leave millions of pensioners impoverished.
We would then support a one-off upgrade of the state pension so all pensioners have a basic amount to live off. The pensions tax regime should then be simplified and replaced by the BOGOF - Buy One, Get One Free - first advocated by our City Editor, Neil Collins, and now wisely championed by the Tory spokesman, David Willetts. With a BOGOF pension, for every pound you saved, the government would put in a pound, too."
Daily Telegraph leader column, 10 Set, 2005
Another delay for Equitable complaints: Equitable Life has been forced to apply for a new waiver from the Financial Services Authority, to give it more time to deal with the wave of complaints it has received in the wake of Lord Penrose's report into the troubled insurer, published in March. The move will mean that hundreds of policyholders who complained as far back as March, may now not receive a comprehensive response until as late as October.
The FSA granted Equitable its first waiver in May, allowing it to simply send out generic acknowledgement letters to all complainants, and to defer its formal responses until July. However, as the letters continued to flow in, the insurer has remained unable to get to grips with its swelling mailbags, forcing it to obtain an extension for its original waiver.
Equitable policyholders who complained in the wake of Penrose may not receive a response until October. The FSA's new waiver says the Society does not have to make formal responses until after 30 September, at which point it has a further four weeks to ensure all complaints have been dealt with.
A spokesman for Equitable said: "Although the number of complaints relating to Lord Penrose's report is small, we regard it as important to give each one full consideration, and because some complex legal and actuarial issues are raised, that does take time. We are sorry for the delays."
Paul Braithwaite, the general secretary of the Equitable Members' Action Group, said: "Waiver after waiver is granted to Equitable - much to the frustration of policyholders who are pursuing grievances. There is foot-dragging in their responses and usually it is a form letter which does not deal with the details in the complaint."
21 August '04 - James Daley in The Independent
Regulation through the looking glass and semantic gymnastics: The chief City watchdog is following the doomed footsteps of Equitable Life in its attempt to redefine the meaning of a guarantee. Just as happened with Equitable, the FSA has got itself into a fix by saying pensions were guaranteed when they were nothing of the kind. Equitable was brought to its knees by guaranteed annuity rates it could not afford to honour. Now, as things have turned out, using the G-word too freely could prove a very expensive mistake for the FSA.
Ros Altmann (a government pensions adviser)
"They (the FSA booklets) repeatedly tell members that final salary pensions are 'guaranteed', without mentioning any circumstance in which this might not be the case. No mention of the danger of losing their pension if the employer winds up the scheme or becomes insolvent. No risk warning whatsoever.
"These booklets were not corrected until December, 2002, so the public was misinformed by the FSA for years.
Oh dear. Bear in mind that the FSA has driven several financial advisers out of business and imposed hundreds of thousands of pounds in fines on insurers and others for failing to point out risks properly.
The FSA: "The word guaranteed cannot mean guaranteed in all circumstances. It is unreasonable to have expected that we could forecast that some companies would go bust in future."
Why ever not? There is, after all, nothing new about firms failing. Nor is the FSA first to strain itself with such semantical gymnastics. In Lewis Carroll's Alice Through The Looking Glass, Humpty Dumpty informs her: "When I use a word it means just what I choose it to mean, neither more nor less."
If nobody at the FSA has a dictionary to help them with the meaning of the word guarantee, surely they can remember what happened to Humpty Dumpty. And Equitable Life, for that matter.
14 August '04 - Ian Cowie, Personal Finance Editor, Daily Telegraph
More than 100 EMAG members turned out on "A hot August night". They were rewarded with an excellent address from Dr Vincent Cable who made an upbeat speech, with fulsome praise for EMAG - telling us just how very short the attention span of most MPs is and how quickly, without EMAG's persistence, the issue would have been forgotten.
He reported that the meeting he and Norman Lamb had held with Ann Abraham led him to believe that this time the prospects of a thorough new report are promising. He indicated that the report ought to be deliverable in six months or so, which drew gasps of scepticism (from me too!).
Unlike an ELAS AGM, six of the committee made active contributions and a genuine, helpful two-way dialogue took place with the members. Thanks to the members who attended.
It is extraordinary that, four years on, EMAG still harnesses so much goodwill and commitment towards the common purpose of government compensation for the injustice caused by regulators who failed us all. Paul Braithwaite of EMAG, on Motley Fool Aug 6
The Financial Times, about the Treasury select committee's new report on "Restoring confidence in long-term savings"
"........................ a missed opportunity................ catalogues the scandals that have eroded consumers' trust in the financial services .................... the disappointments ladled out to with-profits and endowment mortgage policy holders and the losses suffered by investors in Equitable Life, precipice bonds and split capital investment trusts...............
But the report says nothing about the lamentable absence of a clear government policy towards savings.
Still more disappointing is the way it diagnoses the financial services sector's dependence on commissions as the main factor behind its failure properly to serve consumers, but pulls back from calling for their abolition.
The committee describes an industry in which most people responsible for the day-to-day marketing of long-term savings products are paid by commission on sales. The potential for a conflict of interest in such an arrangement is obvious but the situation is made worse by the multiplicity and lack of transparency in the commissions that financial salespersons earn.
The committee is rightly appalled by the trail commissions. But the best it can manage is to urge financial product providers, IFAs and the Financial Services Authority "to limit urgently" the basis on which they are paid.
This pussyfooting appears to reflect FSA and Treasury concerns that the financial adviser-based sales system could not stand rigorous reform. By pulling its punches, the Treasury committee has produced an exhortation rather than a cure for Britain's savings problem.
Sadly, it is the fate of exhortations soon to be forgotten."
Leader column of the Financial Times 29th July, 2004
Ombudsman's jurisdiction extended
The minister for the Cabinet Office, Douglas Alexander:
"In response to a request from the Parliamentary Commissioner for Administration (The Ombudsman), I have agreed to extend her jurisdiction to include the role of the Government Actuary's Department in relation to the prudential regulation of insurers prior to this function being transferred to the Financial Services Authority in April 2001. This will enable the Ombudsman to conduct a full investigation into Equitable Life. The amendment to the legislation to make this change will be made as soon as possible." (See also Stop Press)
Click here to read more
"She got there in the end, then: Ann Abraham, the Parliamentary Ombudsman, yesterday did the only thing she decently could and announced a fresh investigation into the prudential regulation of Equitable Life, offering policyholders a glimmer of hope of government compensation.
But her journey to this place has not exactly been bold or consistent…... the Penrose report and the public feeling aroused by its findings have put a bit more fire in Ms Abraham's belly - after flames were applied to the soles of her feet. It could hardly have been otherwise when Penrose heavily criticised the Department of Trade and Industry, for decades the main insurance regulator, and was scathing about the GAD: "complacent, lacking challenge and hesitant in criticism".
So now Ms Abraham is pressing for the GAD's actions to be brought within her jurisdiction, and the government has indicated that it will oblige. It could hardly not - even though ministers are not keen on an inquiry that could end up with a huge bill for the government to foot. Nor, it emerged yesterday is the Treasury-sponsored Financial Services Authority.
Its submission to the ombudsman suggested there would be little regulatory benefit (as there probably will not) and that another inquiry would be "a deterrent to anyone considering working as a regulator".
So Ms Abraham, get your priorities right: think not of the suffering tens of thousands of Equitable policyholders, but the FSA's recruitment needs.
Bathos and narrow self-interest do not get much richer than this."
A whodunit as enduring as The Mousetrap. Martin Dickson Financial Times; Jul 20, 2004
"I have joined this site today. Posts on this site were brought to my attention in a number of emails I have received recently - from various sources, which include EMAG - and from reading elsewhere press notices from ELAS (as one does) and the thoughts of a number of individual ELAS policyholders.
My own view (I recognise that whatever I say personally will never be taken as my 'personal view') is that the connections between EMAG and the Ombudsman made in recent weeks have been greatly helpful.
I am the Ombudsman's 'Private Secretary' - which to those outside the UK public service means that I am her (what Americans call) 'Chief of Staff'. For those wanting my background, I was an academic in both the UK and US sectors (my speciality was public administration) before joining the Ombudsman's office in 1999; I was the investigator who led the second stage (redress) of our office's SERPS investigation.
I am told that this forum is somewhere where those with views, evidence and further comment on the events at ELAS are to be found. For that reason primarily, I would like to read things here and, for the sake of transparency, to be open about my membership.
I would say that, whatever has been the view about the Ombudsman's consultation exercise, it has been most instructive to us. No doubt that will be more evident soon. I am happy to try to resolve here or off-site any issues members of this site may have."
A post by Iain Ogilvie of the office of the PO Motley Fools July 10
This gave rise to an article in the Daily Telegraph 15 July by James Moore
- The Ombudsman mustn't let Kelly set the agenda
I want a government that is big enough to own up to its mistakes, and that moves heaven and earth to compensate the victims as fast and as fully as possible, writes Liz Dolan, Personal Finance Editor
Ruth Kelly is still trying to convince MPs that black is white, I see. Last Monday she told MPs on the Treasury Select Committee for the umpteenth time that Lord Penrose found no evidence of Government negligence or maladministration in his report on Equitable Life.
Hypnotherapists employ a similar technique. A simple message repeated over and over to the subconscious mind can reverse deep-seated convictions to the contrary.
Luckily, the method works best with willing subjects. MPs are not willing subjects. They know that, even though Penrose was specifically briefed not to find evidence of maladministration, he proved his independence of mind by doing just that.
As the July 22 deadline for Ann Abraham's decision on whether to reopen investigations into the Equitable affair draws ever nearer, Kelly is presumably also hoping to send subliminal messages to the Parliamentary Ombudsman.
4 July '04 Liz Dolan, Personal Finance Editor
"Tautest singles match of the day at Westminster was a contest between Ruth Kelly, who is one of Gordon Brown's Ministers, and the MPs of the Commons Treasury Select Committee. There was a tangible disregard in the room. They did not all think much of her and she, by jingo, thought little of them right back.
Her ministerial responsibilities as Financial Secretary include pensions - which in recent months has meant the Equitable Life disaster.
That was not an unqualified success for Miss Kelly.
For the first time, the surging booster rockets attached to her progress have spluttered. There she sat yesterday with three Treasury civil servants. She looked the youngest of the group, as well as the untidiest. The civil servants were neat, clerical in bearing, precisely fingernailed. Miss Kelly has little time for such cosmetic matters. She belongs to the Iris Murdoch school of hygiene. Colouring round the gills, her brow uncombed, she frowned at the committee's early questions and harrumphed.
Miss Kelly would not say that people are baffled by savings schemes. Instead, in her deep posh-Oirish voice, she said that "there is clearly an asymmetry of information between consumer and provider". God, I hate such language. And there was more. Miss Kelly used expressions such as 'proactive', 'best practice' and 'step change'. There are few surer signs that a minister is below par.
As a favourite of Mr Brown, Miss Kelly is well positioned. She will probably enter Cabinet the moment Mr Brown becomes Prime Minister. No doubt she will be governing us for decades to come.
Just one little rain cloud. In Bolton West, once Tory-held, she has a majority of only 5,518. She will need to be a good deal less arrogant with her constituents than she was yesterday with Messrs Fallon and McFall, or she might find the good voters of Bolton turning her out on her rump."
Quentin Letts in Daily Mail June 29
Also,the full uncorrected transcript of the evidence
Labour blow for Equitable victims:
FINANCIAL Secretary Ruth Kelly told MPs that the Government would not be paying compensation to people who lost out in the Equitable Life disaster because savers had invested 'of their own free choice'.
Tory MP Andrew Tyrie said many policyholders believed the Government is 'quietly lobbying' the Parliamentary Ombudsman, Ann Abraham, not to re-open her inquiries into the disaster.
The Ombudsman is seen by Equitable as the best route to redress. The Tories said the Government's refusal to publish its submission to the Parliamentary Ombudsman over whether she should reopen her inquiry into Equitable Life showed it 'has something to hide'.
Kelly said the Treasury had made a submission. 'We have put forward our view. It is perfectly at liberty for the Parliamentary Ombudsman to publish that submission if she so chooses to do.'
"People who invested in Equitable Life did so of their own free choice. That is a very different situation to members of failed company pension schemes.
It's also the case that they tend to have supplementary pension provisions - many have large pension pots, others have smaller pension pots. Largely it is their expectations that have been disappointed."
18 June '04 - Labour blow for Equitable victims. Daily Mail.
Press Association coverage of same story:
17 June '04 - Government 'Has Something to Hide' on Equitable. The Scotsman.
For actual exchange in the Commons click here to see Hansard transcript
On Thursday June 17th, 2004 Ruth Kelly made five misleading claims at the Commons' Despatch Box:
Penrose, in his remit, was explicitly precluded by Ms Kelly from addressing compensation and culpability, but his report DOES provide a litany of evidence of maladministration.
- Penrose found no evidence of maladministration.
- Penrose made no recommendation for compensation
- Investors in Equitable were different to those in failed company schemes because they did so with free choice.
- Investors in Equitable tend to have supplementary pension provision.
- It is largely investor expectations that have been disappointed.
The misleading way that Ruth Kelly characterised the Penrose report to Parliament (and your own select committee) was addressed in EMAG's important and succinct paper, discussed face to face by EMAG with Ruth Kelly on May 12.
It is EMAG's understanding that, post 1988, no employee has been obliged to participate in his or her employer's company scheme, hence there is no difference on free choice.
Whether the Equitable's policyholders have other provisions is conjecture and utterly irrelevant. We know that many do not. Investors were doing exactly what the government has urged by way of prudent self-provision. Whether rich or poor, ALL are equally entitled to expect that the words "regulated by the DTI/Treasury/FSA" had substance.
The loss to more than one million policyholders and their dependents of more than £3,000m NOT related to stock markets but down to regulatory incompetence was REAL and not mere expectations.
Extract from EMAG submission to Treasury Select Committee 23 June, 2004
A statement by Alex Henney:
"It is now two years since I took on the unpaid and very time-consuming chairmanship of the EMAG committee. Over the two years, thanks in significant part to the efforts of EMAG in commencing a judicial review to put aside the unsatisfactory report of the Parliamentary Ombudsman on the Regulation of Equitable and to increasing press activity and political lobbying, there has been a major improvement in the chances of recovering for Equitable Life policyholders public compensation for failure by the government as regulator to do what it should have done to protect those policyholders.
I am strongly of the view that EMAG is a valuable resource for policyholders. However, it can best make its contribution if Equitable Life is willing to recognise EMAG's complementary role. I have concluded that there may be a better prospect of that happening with a new chairman of EMAG. I accordingly tendered my resignation to the committee of EMAG and, as they have been kind enough to say, with regret they have accepted it. However, at their request, I have agreed to remain a member of the committee and remain dedicated to the realisation of EMAG's objective of promoting the interests of the long suffering and grievously wronged policyholders of Equitable Life.
A statement by EMAG's outgoing chairman Alex Henney
It was vintage Treves, but his rant left a bitter taste
"Vicious, volatile, venomous and vindictive" - sadly, these words, uttered by Vanni Treves, the chairman of Equitable Life, at the annual general meeting, were not the result of a rare moment of self-awareness.
They formed part of a well-rehearsed attack on the leaders of the Equitable Members Action Group (Emag), delivered in response to a question from a policyholder.
The policyholder, Peter Watson, said of Emag: "For a voluntary organisation, it has done an astonishing job of keeping after government, commissioning valuable reports, not letting the parliamentary ombudsman get away with a whitewash and co-ordinating effective political and media campaigns. So why does the board find it necessary to attack Emag so mercilessly?"
If I'd been a policyholder, I would have got up and cheered. Treves was delighted for a very different reason.
Treves, who had already described the resolutions as "flying in the face of legal advice", rammed home his victory by threatening to charge the 1,000 signatories to the resolutions £50,000 to pay for that legal advice.
Paul Braithwaite, the general secretary of Emag, said on Friday: "We could have done a lot with that £50,000 he wasted."
Braithwaite, who was badly shaken by Treves' merciless attack, is now seriously worried about the effect the demand for money will have on policyholder support. "A number of people have already said they're terrified that, by giving us money, they're liable if Treves tries to charge us for legal fees we know nothing about," he said.
For a board that has spent tens of millions of pounds of policyholders' money on legal fees to sue a former auditor and former directors, the David and Goliath tactics against a tiny, cash-strapped organisation smacks of the playground bully.
Especially as that tiny organisation has worked tirelessly - and unpaid - to pull off several notable successes on the policyholders' behalf.
Sunday Telegraph comment column by Liz Dolan 22nd May, 2004
Anyone who still doubts that Vanni Treves, the usually emollient chairman of Equitable Life, can wield a steel fist should have been at yesterday's annual meeting. His ambush of Equitable Members' Action Group was carefully planned and executed. Asked why EMAG and the board could not work together, Mr Treves put up slides with extracts of correspondence from the action group that variously accused the directors of spinning, obfuscation and manipulative trickery. Choosing his words carefully, Mr Treves described the leadership of Emag as "vicious, volatile, venomous and vindictive".
There is no doubt that Emag has sometimes been intemperate in its criticisms of the present Equitable board and its predecessor, the Financial Services Authority, the Treasury and just about everyone else in this sorry saga. Yet if had not been for the Herculean efforts of Emag and other action groups, there would be a lot less pressure on the Parliamentary Ombudsman to re-open her inquiry - which has always been policyholders' best hope of compensation. Equitable should also drop its bluster about possibly seeking £50,000 from Emag for legal costs incurred by the board over the action group's defeated call for campaigning funds. Shareholder and policyholder democracy costs money. Punishing Emag for putting up a valid resolution would smack of bullying - and, yes, vindictiveness.
Martin Dickson. Financial Times 20th May, 2004
Will Kelly save the day?
Kelly's vigorous approach to home reversion will help cement her reputation in the financial services industry as a minister who gets things done. She may have to work very hard, however, to get the government off another hook on which it has impaled itself - the refusal to consider compensation for any of the aggrieved pensioners of Equitable Life.
Kelly's position was made appreciably more difficult yesterday by a deal between Gordon Brown, the chancellor, and some of Labour's biggest union backers that will lead to compensation for 60,000 workers who lost their pensions when their company schemes closed.
More worryingly for Kelly, though, the only rational justification for the deal is that these workers were left stranded when their pension schemes closed before new rules were introduced to protect members. That amounts to an admission of regulatory failure, which is exactly what Equitable members claim caused the mutual life company's problems.
14 May '04 - Kevin Brown: Reverting to type. FT
Tories: We'll compensate Equitable victims.
The Conservatives have pledged to pay compensation to Equitable Life victims who lost money through regulatory failure, if they win the next general election.
In a forceful letter to Ann Abraham, the Parliamentary Ombudsman, Andrew Tyrie, the shadow financial secretary to the Treasury, called for her to investigate the role of the Government and the Government Actuary's Department (GAD) in the Equitable debacle. If maladministration was found, compensation should be paid, he said.
Up to 1m Equitable members are believed to have lost money after the beleaguered insurer closed to new business. Tyrie also called for any investigation to be assisted by Lord Penrose. He said: "Lord Penrose's report identified regulatory failure both of the system of regulation and of its operation over a sustained period, particularly the 1990s.
"I strongly urge you to invite Lord Penrose to participate as fully as possible in your further investigation. His lengthy investigation has left him uniquely well placed to assist you."
Meanwhile, the High Court last week gave the Equitable Members Action Group the green light to proceed with a claim for a judicial review against the Ombudsman's much-criticised report of last July.
2 May 2004 - Teresa Hunter in the Sunday Telegraph
Fresh hope of compensation for claimants in Equitable case
Equitable Life policyholders' battle for taxpayer-funded compensation took a significant step forward yesterday, when the High Court gave the go-ahead to challenge the parliamentary ombudsman's dismissal of a test case.
Ann Abraham further boosted investors' hopes of a payout when she signalled for the first time yesterday that she might be willing to increase the scope of her investigation.
Ministers have repeatedly cited Ms Abraham's earlier finding that the regulators were not guilty of maladministration in explaining their refusal to offer redress to Equitable's 1m-plus policyholders.
The ombudsman said she hoped to complete her consultation before the summer parliamentary recess began on July 27 - a comment greeted with a sceptical "fat chance" response by one observer in the well of the court.
If she decided a fresh investigation was needed, the ombudsman told the judge she would ask the government to change the rules to allow her to look at the role played by the Government Actuary's Department, one of the regulators most heavily criticised by Lord Penrose. The Cabinet Office refused to say how it would respond if Ms Abraham asked for this, but government insiders privately said ministers would be almost certain to accede to such a request.
If Ms Abraham refuses to reopen her inquiry, she could find her hand is forced by the courts. Mr Justice Moses yesterday ruled that the ombudsman's widely-criticised test case judgment last year should be open to judicial scrutiny.
The action group said it felt vindicated by the judge's decision, although arguments later over a possible costs cap did not succeed and it will need to raise a six-figure fighting fund for the hearing.
By Nikki Tait and Jean Eaglesham Financial Times; Apr 30, 2004
"Help ahead but is this equitable? It is hard not to sympathise with the 60,000 people whose company pensions have been lost because their employers have gone bust. For people near retirement, this is a life-wrecking experience. Government plans to set up an insurance scheme to stop this happening again do not include retrospective payments and there has been an outcry on behalf of those already affected - and the shouting has not fallen on deaf ears. The Government is hinting it may step in after all.
This contrasts with the hard line the Government has taken over the victims of the Equitable Life disaster. Tens of thousands of Equitable investors saved for years only to find that their pensions had been cut because of mistakes at Equitable, yet the Government says there is no case to answer.
So why the difference in attitude? It could be that the Equitable investors are seen as well heeled, whereas the company scheme savers are seen as battling workers of modest means. Not all Equitable investors are well off, though, and there is a contradiction in the Government's attitude to the two groups.
The Government is addressing the issue of bust pensions because it accepts that there is a gap in regulation and protection; yet it dismisses the plight of the Equitable victims on the basis that there was a lack of regulation to prevent the crisis. Since there was a 'light' regulatory regime in place there is no point blaming the system because there was none."
25 April '04 - Maria Scott in the Observer 25th April
Telegraph interview's FSA's supreme, John Tiner:
"I ask him whether he worries about making a wrong decision. "No, no, not really. I don't actually," he replies...
Does he feel powerful? He's not silly enough to say 'yes'. "I don't sit here thinking I'm a big man, basking in the power of the position," he says. "I sit here and think 'what are the important things that we have to do as an organisation to deliver against our aims and objectives'."
Still, Tiner knows what it feels like to have a brush with the law. In 1986, he was found guilty of drink driving and lost his licence for a year. As a result, he was forced to cycle to the hospital to see his wife, Gerry, give birth to their third child. (The couple met as teenagers, marrying in their early twenties.)
He enjoys fast cars, and his Porsche has a personalised number plate, T1NER. "It's a very unusual surname," he beams, before revealing that his vertically-challenged great grandfather changed the family's name from Tiney to Tiner. He chooses to write down his number plate in my notebook, giving me a chance to look at his handwriting.
A professional analysis of it once revealed an "emotionally volatile person" and a "fear of failure" which has translated itself into "initiative and drive". Is this accurate? He denies being emotionally volatile, but admits fearing failure. "A fear of failure does drive me a lot and stimulates me a lot. It forces you to be competitive."
Kate Rankine, the Daily Telegraph April 3rd
Counting chickens? The Conservatives and Liberal Democrats plan to increase the pressure on the government over the Equitable Life debacle by introducing a bill in the Lords.
The move is designed to challenge the Treasury's refusal to pay policyholders compensation.
The proposed legislation would pave the way for potential claims by investors against the taxpayer by extending the parliamentary ombudsman's remit, allowing her to look retrospectively at the actions of the Government Actuary's Department. The GAD, criticised in Lord Penrose's report into Equitable earlier this month, is seen by the opposition parties as central to the regulatory failure that led to the assurer's near collapse in 2000.
During this week's debate on the Penrose report, Ruth Kelly, the financial secretary, repeatedly cited Ms Abraham's ( Parliamentary Ombudsman) finding in an Equitable test case last year that there was no maladministration. But the Tories, Lib Dems and policyholder action groups claimed the single case ruled on by Ms Abraham was not a valid test because she could not examine the GAD and looked at only a narrow time period.
"Claiming the ombudsman has cleared the government is like clearing the fox of killing the chickens without bothering to look at the hen coop," Andrew Tyrie, the shadow financial secretary said.
By Jean Eaglesham, Political Correspondent of the Financial Times; Mar 26, 2004
The key word is failure, Ms Kelly
RUTH KELLY continues to profess her conviction that Lord Penrose's report into the Equitable Life fiasco absolves the Government from any obligation to compensate investors. So she may not have been best pleased that yesterday his lordship plainly told the Treasury Select Committee that the issue of compensation was entirely outside his remit.
Lord Penrose, however, was far from uncritical of the regulators' role in the Equitable disaster. He found that they failed to keep up with developments in the financial industry; failed regularly to assess how reasonable expectations of policyholders would affect the society's liabilities and failed to note how dangerously optimistic Equitable was in assessing future surpluses.
He actually wrote that "government actuaries did identify relevant issues but consistently these were not followed through and allowed to evaporate".
......It does not really explain how Ms Kelly can conclude that poor regulation had nothing to do with policyholders losing a fortune. And in fact, she did momentarily concede that regulation had not worked absolutely perfectly. She told the Treasury Committee that the Penrose report had found evidence of "a regulatory system failure" rather than "failure by the regulator or individuals".
With the benefit of an Oxford and London School of Economics education, Ms Kelly clearly sees a massive difference between these two statements, although some of the MPs who heard her comments looked a little baffled. Ms Kelly no doubt knows, with the certainty that seems to pervade everything she says, just how many angels dance on the head of a pin. But to policyholders, regulatory system failure probably sounds like a failure of regulation and thus of regulators, which many of them suspect is the case.
Today in his Budget speech, Gordon Brown is almost certain to talk about the pressing need to persuade Britons to save more for their retirement, just as the Equitable investors were attempting to do. But he will have little success in his efforts unless he can persuade the public that they are not going to risk finding themselves in another Equitable.
Editorial by Patience Wheatcroft in The Times 17th March 04
Lord Penrose to Treasury Select Committee 16th March:
Q617 John Mann: You have stated in the report that "the jurisdiction to adjudicate on regulatory failure in duty is not mine"?
Lord Penrose: Yes.
Q618 John Mann: I quote. Whose is it?
Lord Penrose: I think you gentlemen have quite a role to play in that. It would be, I think, for Parliament to look at these matters.
Q632 Norman Lamb: So you cannot rule out the possibility that compensation does flow from failures of the regulatory system?
Lord Penrose: I have sought to avoid adjudicating one way or the other.
Q633 Norman Lamb: The other crucial point on that paragraph you talk about the failures of the regulatory system being secondary; is it not almost self-evident that failures of regulation will be secondary because it is usually regulation of something that has gone wrong, so the primary cause is usually within the organisation that is being regulated. It is then a question as to whether there has been a failure to come to grips with those failures in the host organisation?
Lord Penrose: Typically that must be so.
Click here for more.
(About Lord P's Edinburgh speech 18th March, to the David Hume Institute)
"Penrose says compensation was not part of his Equitable remit:
Lord Penrose, the author of the Equitable Life report, has said making any recommendations about policyholder compensation formed 'no part of my remit', and that there were 'fundamental holes' in the regulation of the society."
Click here for more
COMPARE with Ruth Kelly in Commons debate March 25th:
"Lord Penrose makes no recommendation for compensation. He finds no instance of maladministration by the regulator, nor does he make any allegation of negligence by the regulator. The Treasury has also examined the contents of its report. We see no reason to think that the regulator was negligent or that there was any maladministration at any time while the society was being regulated by the Treasury or, indeed, under the previous regime.."
Bob Spink (Castle Point) (Con): That is all well and good, but my constituents want to know what the Government will do to give them the compensation that they both want and need. Lord Penrose said to the Treasury Committee that he did not consider it in his remit to discuss administration and compensation; he considers that to be the Government's remit. When will the Government come forward and offer the victims of Equitable Life some hope?
Ruth Kelly: Lord Penrose definitely did not say in his evidence to the Treasury Committee that that was the Government's responsibility. Click here for more
EQUITABLE Life policyholders now giving Lord Penrose's forensic report a close read will find little to support the government's claim that they were failed not by the regulators, but by the regulatory system of the Conservative government which represented the "will of Parliament".
The judge says: "I was urged to take account of the political climate that prevailed for most of the 1990s, when the government's objective was to deregulate, to reduce regulatory burdens on business, to avoid interference in private companies, and to let market forces prevail".
However, he goes on: "The observations appear to me to miss the point." They did "not affect the ground for criticism", not least because regulators on the ground had never identified any need to amend the system."
The GAD and department of trade and industry claimed in responses that they had "no knowledge of the existence" of Equitable's annuity guarantees or its fateful differential bonus policy until 1998.
Penrose says there was "acceptable evidence that the regulators knew of the general problem with guarantees in 1993", while the information supplied by Equitable on its bonus policy "should have prompted more probing". It all suggested "a lack of insight into the reality of the regulated entities' business".
Penrose concludes: "It seems not unreasonable to suggest that those in control of any supervisory regime have a duty to monitor the conduct of regulated businesses and take steps to ensure that the systems of regulation that are in force and enforced remain relevant to the changing requirements of the industry".
Ruth Kelly, the Treasury minister, however, chose to stress that Penrose had "not recommended compensation" and brought no finding of maladministration - hardly surprising, as both issues were specifically excluded from the judge's remit.
Simon Bain in Glasgow Herald: 9th March 2004
"Policyholder action groups do not rule out a government offer, suggesting this may be what the Treasury has been struggling with during the 77 days it has had the report in its possession.
They are calling for a debate in parliament to determine the next move. They favour a further short study, preferably by Lord Penrose, focusing on the issue of compensation.
"The worst of all possible worlds would be some 'rescue-lite' package," said Paul Braithwaite of the Equitable Members Action Group. "This would be some cobbled-together veneer to mollify some of the extreme cases, such as the annuitants who are locked in. But there are only 50,000 of those and in excess of 1m who lost out in equal share."
Failing any government response, E7, a combination of the seven Equitable action groups, will ask the board to pursue government compensation.
"If the board believes it cannot do that in its own name, it must fund a representative policyholder action," said Mr Braithwaite.
Equitable Life has already made clear that it is unlikely to sue. It does not expect Penrose to provide the evidence of misfeasance, or criminal negligence, that would create a duty to sue, and believes policyholders' best hopes of extracting money from the government lie with a reopening of the investigation by Ann Abraham, the parliamentary ombudsman.
Mr Braithwaite said the parliamentary ombudsman was the wrong way forward: "We feel she is discredited and her remit excludes her from doing a proper job."
Pauline Skypala in the Financial Times 6th March 2004
"Customers of pension funds in the UK are encouraged if not seduced, coerced or even obliged to join pension funds.
Part of that seduction or coercion is the aura and seal of respectability, security and invincibility that companies assumed, and the various regulators allowed to be assumed, because they were and are regulated by the Lautro, PIA, FSA and whoever else.
As part of the fees paid by clients of these companies to their pension and other investment products, a fee is paid to the FSA (and their predecessors) that covers the cost of providing regulation and associated costs. After all, what is the FSA's budget now - £120m?
In return for this fee, paid by the regulated to the regulators, the customers were given to understand that they were watched over vigilantly and assiduously as they were looking after our money. As regulators they were privy to far more information than clients and blessed with at least double digit (if not triple digit) IQs and paid to watch the activities, liabilities, accounting practices and accounts, solvency and so on of all the so-regulated companies.
If not morally or by statute then as a client - whether directly or vicariously as mutual owner of ELAS as a WP policyholder, I am therefore entitled to expect performance of the contract in return for the consideration of my fees paid to them. I paid for service and the provider of that service maybe negligent and owed me a duty of care. QED if true they should pay up. Unfortunately, that does indeed mean the populace at large pay up through taxation but c'est la vie."
Bhoddisattva on Motley FOOL: 2nd March 43140
"The Equitable Life Trapped Annuitants (ELTA), represents up to 55,000 members and says it's now time to seek compensation.
A spokesman for ELTA says: 'The with-profits fund is diminishing, as it's paying for the salaries and bonuses of the present Equitable board and financing their various non-productive legal excursions.'
The with-profits fund has fallen in value from £26bn to £11.5bn since Equitable Life closed to new business in December 2000.
At first, Equitable Life protected with-profits annuitants from cuts to their income, but the axe has fallen hard in the past two years. Last year saw cuts of about 20% and this year annuity income will fall by 10%.
A spokesman for Equitable Life says: 'The board did everything it could to insulate annuitants and it is disappointed they had to do this. We got to a position were we had to bring annuitants in line with everyone else as it was no longer possible to protect them.'
Justin Harper in the Daily Mail 25th Feb;
"Victims of the Equitable Life scandal who suspect the Treasury's introduction last month into this potentially expensive equation of the Serious Farce Office has much to do with prevarication and little to do with prosecution may not be all wrong.
Existing and new policyholders were encouraged to pay premiums on the basis of those untrue and unfair accounts. A suicidal bonus policy saw Equitable paying out more and more to attract ever expanding new business. Just like a Ponzi or circular money fraud, without new money the game was up. So, deceptive projections of future performance were made on a daily basis.
The prospect of duelling actuaries bemusing jurors with endless tables of figures and formulae is hardly one to inspire the SFO to rush to the Treasury's rescue.
Given the background, it will be no surprise if the SFO is unenthusiastic to set off down another primrose path lined with thorns. However, it may be difficult to pass the problem back to the Treasury too quickly in view of the stakes involved for both regulation and compensation.
But even if the SFO decides to take a closer look - thereby keeping the Treasury off the hook for a while longer - any decision to launch a full criminal investigation is unlikely to result in any different result...
Private Eye P 28 20th February 2004
Regulators' gamble far from equitable: OF ALL the excuses for not paying compensation to Equitable policyholders, the most irritating and least credible has come from the Treasury, which has suggested that Equitable policyholders did better than average for a number of years - the implication being that they had a windfall which they wouldn't have had without the Equitable. Take this one step further, and the policyholders should be congratulating the Equitable on its performance.
"What the Equitable claimed in terms of performance bore no relation to what they actually did. They were dire investment managers. They claimed to produce the best results year after year. But what they were really doing was investing badly then emptying the kitty. Add to this the fact that many policyholders never saw these wonderful results - their money was all taken away by penalties and they received no bonuses." (Alan Steel, IFA)
The other implication from the Treasury statement is that Equitable policyholders did not suffer too much, and whatever they lost they could afford. It is hoping that the popular profile of Equitable policyholders as wealthy toffs will help ease the pressure for compensation. I spoke to one Equitable policyholder, a lawyer who had to return to work when the Equitable cancelled his guaranteed annuity. He said: "There is a lack of sympathy for people like me, but the fact that I am not destitute does not mean that financial institutions should be able to carry on in this way. All investors should enjoy equal protection, regardless of standing."
There's only one reason why Equitable policyholders have not been paid the compensation they deserve - the cost.
Lesley Cambell 8th February, 2004 Scotsman on Sunday
"Campaigners drive onward: The Equitable Life campaigners' machine went into overdrive this week as the interminable wait for the Penrose report into the debacle dragged on.
Another action group was launched to campaign on behalf of late joiners and late contributors; the existing seven action groups combined as E7 to urge the board of Equitable Life to support calls for £3bn compensation from the government; and the Equitable Members Action Group published new research on the returns achieved on Equitable policies, demonstrating that the portrayal of the society's customers as fat cats who benefited hugely from over-generous bonuses is inaccurate.
All these efforts are geared towards achieving compensation from one source or another. EMAG is concentrating on achieving government compensation on the basis of regulatory failure for people who have lost money in Equitable and who remained policyholders after July 2001, when the society cut pension policy values by 16 per cent.
Paul Braithwaite of EMAG says this devaluation had nothing to do with stock market losses: "It was to repay the overdraft of overspent bonuses over the last decade."
Braithwaite and the other action groups are concerned by Equitable Life's decision not to take legal action against the society's regulators if Penrose provides evidence that they were at fault. Equitable said last month that it believes policyholders' best hopes for compensation lie with a reopening of the parliamentary ombudsman's investigation.
By Pauline Skypala in the Financial Times; Feb 7, 2004
Equitable Life warriors unite
Seven Equitable Life policyholder action groups yesterday joined forces to call on the troubled insurer to back their fight for billions of pounds of government compensation.
The official Treasury line is that there will be no government compensation, but policyholders are pinning their hopes on Lord Penrose, who carried out the inquiry, concluding there was regulatory incompetence.
The seven groups, including Equitable Members Action Group and Equitable Life Members Help Group, urged the insurer's board to give its support to their campaign for redress. "Equitable has the infrastructure, the expertise and the access to the evidence to coordinate a proper case for compensation," said Liz Kwantes, a spokeswoman for the groups.
"If the Treasury has set its face against compensation before the Penrose report is even published, leaving it to part-time volunteers, we run the risk of an unequal fight."
Earlier this month Equitable Life backed away from previous statements that it would not hesitate to sue the government. It warned that the legal hurdles were very high and said the best hope of a state payout for policyholders lay with parliamentary ombudsman Ann Abraham.
Paul Braithwaite of the Equitable Members Action Group said MPs and policyholders were being denied a publication date while the Treasury, the DTI and the FSA were "plotting to limit the damage".
Rupert Jones February 4, 2004 in The Guardian
"Are you a man of your word, Mr Brown?
Though Penrose's report into the reasons behind Equitable Life's fall from grace has yet to be made public, it is obvious that for many years a hotch potch of regulators - the DTI, the Treasury and the Financial Services Authority - ignored warnings that all was not well.
After what you said about Barlow Clowes, surely the only avenue open to you is to agree to compensate those who saw their savings at Equitable Life diminished by a combination of mismanagement and regulatory neglect.
Only by paying up will you draw the Equitable Life debacle to a conclusion. Only by paying up will you help restore confidence in long-term savings. Only by agreeing to compensation will you demonstrate that, in the area of financial services and fair play for consumers at least, you are a man of consistent beliefs.
Penrose may not give policyholders at Equitable Life or the mutual's present board the ammunition to launch legal action against the Government. But as you stated in the House in 1989, the Government has a moral duty to compensate.
So, come on Gordon, write the cheque."
Jeff Prestridge, Editor of the Financial Mail on Sunday on 25th Jan, 2004:
Equitable plays down legal action against Government:
Charles Thomson, chief executive of Equitable Life, yesterday played down the possibility of launching a lawsuit against the Government over its role in regulating the society in the 1990s.
The move is sure to disappoint policyholders pinning their hopes on legal action.
Mr Thomson indicated that Equitable would be disinclined to take legal action even if the forthcoming Penrose report on the mutual's collapse is critical of the Government.
He said: "If there is no legal case, and even if there is, the best route is (for) the Parliamentary Ombudsman to reopen her investigation."
Antonia Senior in The Times 22nd Jan, 2004