"The closure of Equitable Life to new business cast doubt on the Government’s plans to get people to save through private pensions. One by one, the icons of British insurance have been shattered. First it was Lloyd’s of London, whose individual underwriting 'names' found they had been taken to the cleaners. Then a host of household-name insurers were in the dock for mis-selling personal pensions...
The (Equitable) case raises some fundamental questions about the provision and regulation of private pensions in Britain. One concerns the mainstay of life insurance and pensions, the with-profits fund... the drawback of this approach is now manifest: no one, it appears, from the chief actuary down, fully understood the risks to which Equitable’s with-profits fund was exposed.
The debacle at Equitable Life also poses questions about the adequacy of regulation……The Financial Services Authority (FSA), which has been regulating the life insurance industry since the start of 1999, argued that the Law Lords’ ruling changed everything. But this seems odd, since as early as 1998, the Treasury, which then regulated the industry, was seriously worried about the solvency of Equitable Life...
Even before Equitable’s crisis, the private-pension business was having problems. Saving for retirement through pensions was once seen as a no-brainer for the better-off because of the tax privileges. But the lowering of the top rate of tax to 40% in 1988 and the abolition of dividend tax credits for pension funds in 1997 eliminated many of these advantages..."
The Economist: Note that this article was written NINE years ago, on 21 December 2000.
Honor Blackman blames PM for Equitable delays
"Actress Honor Blackman has blamed the Prime Minister for the delays in compensation for Equitable Life customers.
Ahead of a key ruling on the Equitable Life scandal this week, the 84-year-old told The Telegraph that putting the Treasury in charge of payment amounts for victims of the life assurer's near-collapse in 2001 was like putting 'the fox in charge of the hen house'.
Her comments came as Sir John Chadwick, a former High Court judge, prepares to give an update on a compensation scheme for over 1m eligible policyholders on Wednesday.
Ministers had previously rejected the Parliamentary Ombudsman's calls for £4bn- worth of compensation.
Ms Blackman, who lost half of her own Equitable Life pension, said: 'When the election comes, we want the independent tribunal that the Parliamentary Ombudsman called for.' "
Daily Telegraph, Jamie Dunkley, 13 December, 2009
"People have been thrown to the wolves. Honor Blackman implores the Government to help the thousands affected by the Equitable Life debacle.
When I bought my pension from Equitable Life in the early 1990s I assumed that it would be prudently invested, safely managed and properly regulated so that when I needed it, it would be there for me. But the Government’s regulators have failed me and a million other people with Equitable Life pensions and savings and when they fail they don’t want to take any responsibility. What message does that send out to people about the wisdom of saving for one’s old age?...
Equitable Life pensioners are often presented in the media as a bunch of well-heeled lawyers, doctors or judges, but this is a myth. EMAG (Equitable Members Action Group), of which I am a member, has calculated that the average pension pot was £46,000 before the cuts – that will buy you a pension of less than £70 a week...
EMAG tells me that in 2001, the Government were on the brink of bailing out Equitable Life to the tune of £5 billion, at the time, Howard Davis, said that to do so would be to admit that regulation has failed! Breathtaking. Prompt action then could have saved much of the pain and misery that has been caused to victims of the Equitable over the last nine years and who knows, if they really had learned their lesson at the time, we as taxpayers might have been spared the subsequent bailouts of the failed banks - Northern Rock, RBS and HBOS. And why should we get nothing for the failures of UK regulators when they can find £5 billion to rescue savers with Icesave – a foreign bank that wasn’t even regulated in this country?...
What makes me so angry is that we had regulators who were supposed to watch over the interests of hard-working people who put their cash into Equitable. They are responsible for ruining thousands of lives - why aren’t they in prison? I bet they’re all right, I’m sure their pensions aren’t affected. And yet the people who did the right thing - who tried to provide for their old age - get thrown to the wolves...
Meanwhile the Treasury continues to show contempt for the Parliamentary Ombudsman and to delay and delay. Instead of a proper transparent Tribunal we are stuck with this means-tested ex-gratia payment scheme. We don’t know how much will be paid, to whom it will be paid or when it will be paid. I want more than warm words of reassurance from the minister - I want proper compensation for the wrongs that have been visited on us by a decade of regulatory failure. I’ve lost all faith in pensions, savings and the banks...
Is it right that reckless bankers are rewarded for gambling with our money with obscene bonuses underwritten by taxpayers’ money when responsible people who tried to provide for their old age are being left to twist in the wind? And what is the point in having a regulator if there is no accountability when things go wrong?
My challenge to Gordon Brown is this: if you really want people in the UK to save for their old age, do the honourable thing now by delivering proper compensation to the victims of the Equitable Life scandal before it’s too late."
Honor Blackman, Sunday Telegraph 22 November, 2009
"Honor Blackman vents anger over £4 billion compensation delays:
As Pussy Galore, in the 1960s James Bond film Goldfinger, Honor Blackman played a smouldering femme fatale who made short shrift of suitors and enemies alike. Now, the 84-year-old actress has another opponent in her sight - Gordon Brown
Ms Blackman...blames the prime minister for the delay and said she is prepared to 'do what Joanna Lumley did' and shame ministers into action, employing the same techniques used by the Absolutely Fabulous actress in championing the cause of the Gurkhas...
Ms Blackman, who lost half her Equitable pension, personally blames the Prime Minister for the long delay in paying compensation. She told The Sunday Telegraph: 'The Government has been dragging its heels for years. I point the finger of blame at Gordon Brown. When he was Chancellor in 1998 the Treasury was informed that Equitable Life was technically insolvent – two years before (it) was closed to new business. He could have done something then, long before we had the credit crunch. And he didn't do anything. He still doesn't...'
A judicial review last month instructed the Treasury to change its terms of reference for the compensation scheme being drawn up by Sir John Chadwick...
However the department has so far failed to follow the court's instructions and inform the body representing the Equitable's pensioners, the Equitable Members Action Group (EMAG), over the new terms of reference. The group now hopes the High Court will force the Treasury to speed up publication of the way the scheme will work.
Paul Braithwaite, of EMAG, said: 'By failing to show us its revised terms of reference the Government has failed to meet the terms of the judicial review. It's very important we see how it is planning to devise the compensation scheme.
'Every delay by the Government allows the grim reaper to make their problem go away and shrink the size of the eventual compensation bill.'...
Ms Blackman said: 'It has been a case of gross maladministration, and it's time that the government responds. But it is in their interest to delay paying out in the hope that more of us fall off the twig, leaving fewer people to compensate. If they can kick a response in to the long grass until after the election, it won't be their problem any more...
'What angers me is that the people who perpetrated this and other financial disasters never gets punished. It's so maddening. We've just gone through a frightful period, with the banks having been thoroughly irresponsible and people living on the never-never, buying things before they could afford them.
'For those of us who have been responsible, providing for our retirement so that we're not a burden to our families and or to the state, this is the repayment we get.
'Equitable let me down and I really need some money'. Coming from my background, I don't want b****** favours. I want justice."
Sunday Telegraph, by Patrick Sawer 15 Nov 2009
"Protestors rallied outside parliament to demand government compensation for the one million Equitable customers who lost money. Former Avengers star and Bond girl Honor Blackman today added her voice to a protest demanding government compensation for the one million victims of the Equitable Life debacle.
About 400 policyholders and campaigners took part in a rally and demonstration outside the Houses of Parliament, at which 15 wooden coffins were borne aloft to symbolise the 15 Equitable Life pensioners who die each day, 'waiting for justice'.
Guest of honour was Blackman, who told the Guardian that half of her Equitable pension 'went down the drain' as a result of the insurer's near-collapse. 'I should think probably in three years' time, if I live that long, there won't be anything left,' she added...
Hundreds of thousands more victims of the affair could now be entitled to compensation, after policyholders last month claimed a high court victory in their long battle with the government over payouts. Two judges quashed the Treasury's decision to reject a number of findings of injustice and maladministration made by the parliamentary ombudsman, who carried out a detailed investigation into what went wrong.
EMAG, the Equitable Members Action Group, said the ruling would dramatically increase the number of people eligible for payouts. It added that the battle now was about who would get redress and how much they would receive...
Paul Braithwaite, EMAG's general secretary, described the proper compensation that policyholders believed was due as a 'debt of honour' that should not be ignored because the public finances are in a bad state. 'What's £4bn or £5bn when compared with the billions that have been wasted to prop up the banks? It'd be pocket money well spent if it goes towards restoring faith in pensions.'
Vince Cable, Liberal Democrat Treasury spokesman, who attended the demonstration, said: 'Regardless of the means of delivery, it is vital that parliament asserts its authority to ensure the people who have been affected by this scandal receive proper compensation quickly. It's not a question of charity, it's a question of justice.'"
The Guardian, Rupert Jones 5 November, 2009
Extracts from Dr Tony Wright in the Commons debate on Equitable Life, 21 October:
"It is extremely unfortunate that we do not have a mechanism that gives the House collectively—I would hope on a free vote, because it is a House matter—the ability to determine the issue. We have not had a chance to do that. It is in some ways unfortunate, but perhaps necessary, that the only mechanism that has been found is an Opposition party motion on an Opposition day. From the point of view of the House and the ombudsman, it would be much better if there was a mechanism by which we could test the House’s opinion, in a genuinely independent way, on whether it wanted to accept what an ombudsman had said in such special circumstances.
... but there is a larger public interest in maintaining the integrity of the ombudsman system. If we start to chip away at that and say, 'Oh well, we’ll accept some of her findings, but reject others,' we chip away at the ombudsman system.
... When the ombudsman was established 42 years ago, it was not said in the legislation that the ombudsman's findings would be binding. It was said that after recommendations were made, a response would be made. The assumption has always been that those recommendations would carry an authority with them and be routinely accepted. On the whole, that process has worked over the years.
We get into difficulties if Governments start saying that they want to depart from that convention, to pick and choose between findings and to vary the remedies recommended by the ombudsman
... Only the House can come to a view on those.
The ombudsman has settled views on how redress should follow from findings of maladministration leading to injustice. Redress is part of the system. We are not compensating for the mismanagement of the Equitable Life company, or for what happened to the markets that made life more difficult than it would have been otherwise for policyholders, but we are compensating for that element of serial regulatory failure that contributed to what happened to those policyholders. It was only late in the day during the ombudsman’s inquiries that the Government suddenly announced the doctrine that they would not compensate for regulatory failure. The ombudsman rightly said to that, 'Well, I wish that the Government had said that at the beginning of my inquiry.' When she was carrying out her inquiry, those bodies were not immune from ombudsman investigation or from paying compensation for regulatory failure.
The principle that the ombudsman advances is the same as the principle she advances in every other case that she investigates. When she finds maladministration by a public body, the people affected should be put back into the position that they would have been in had the maladministration not occurred. She has applied exactly the same principle in this case as in every other case that she investigates. The question for the House—I keep saying 'for the House' because it is for the House to decide and not the Government—is whether it wants to adhere to that principle or not. If it does, it will have to go with the ombudsman's principle of redress in this case, which would mean that all those who have suffered loss as a result of maladministration must have some remedy.
...The fundamental point is that we have to decide, not as party people—that is how we do everything else in this place and it often demeans us—but as House people, whether we want to assert the integrity of the office of the parliamentary ombudsman, which this House established more than 40 years ago, or want to see it progressively undermined..."
Hansard, at column 942
"Justice for Equitable Life moves closer. Many congratulations to the doggedly determined Equitable Members Action Group, which has won yet another victory over a government that has attempted to frustrate justice – both natural and legal – at every turn.
EMAG's successful legal challenge to the way in which the Government proposes to compensate victims of the Equitable scandal (or more correctly, not compensate 90 per cent of them) will force ministers to think again. They have three weeks to do so after yesterday's judgment, but it really shouldn't take that long to dust down the recommendations of the independent Parliamentary Ombudsman, who last year called for a properly funded compensation scheme for the benefit of all those who lost out in the Equitable affair.
Let's hope the Treasury does the decent thing this time. Goodness knows, its record of ignoring all inconvenient verdicts against it – handed down by the Ombudsman, the courts, and several committees of MPs – is shameful enough already. Too many Equitable victims have already died without receiving compensation, while many more are suffering financial hardship that could have been alleviated years ago.
Still, the signs are not good, with government lawyers yesterday clinging to one part of the ruling, which accepted it is for Parliament to work out the detail of how to pay out compensation.
True, but the ruling also makes it clear the settlement must reflect the findings of the Ombudsman, many of which the Treasury has always rejected. And Parliament has already given its verdict – a majority of voting MPs have signed an early day motion calling on the Government to drop its limited compensation scheme."
The Independent, David Prosser 15 October 2009
(Extracts from a letter from the Parliamentary Ombudsman, Ann Abraham, to Sir John Chadwick.)
"My July 2008 report contained my definitive determination of the relevant complaints and my final assessments of the related actions of the public bodies responsible for the prudential regulation of Equitable Life. The recommendations which I considered to be appropriate in all the circumstances were also set out in that report. I have nothing further to add to all that...
...the approach I adopted in my report was cumulative. I said in my report that it would not be appropriate to take each matter in isolation. I remain of that view.
The conclusions set out in my report demonstrated failings which went to the heart of the responsibilities and obligations of the public bodies responsible for the prudential regulation of Equitable Life. I found that maladministration pervaded the exercise by those bodies of their functions throughout the period covered in my report - and that my findings were of such individual and cumulative significance that they demonstrated a general failure by the relevant bodies to discharge their statutory functions in a proper and effective manner.
In essence, the view expressed in my report is that, absent the serial maladministration I had determined occurred from July 1991 onwards, no reasonable investor would have joined or remained with Equitable Life throughout that period - going instead to another life insurance company.
... I do not share your view that the tribunal I recommended should be established would have needed to seek to examine each finding I made in isolation in the way envisaged in the Government's response to my report and in your Proposals document.
Instead, any such tribunal would have been engaged on a process of devising a method of identifying the performance of a hypothetical or real alternative investment vehicle - and then of assessing and paying the claims of each individual to the extent of the relative loss that they were assessed to have sustained..."
Ann Abraham to Sir John Chadwick 20 August, 2009
"Equitable Life Payout Plan Doesn't Add Up.
A government-appointed judge who is trying to come up with a compensation scheme for those affected by the near-collapse of the insurer Equitable Life is proposing that any help given to victims is based on how much they would have received if they'd invested elsewhere. But Nic Cicutti feels there is a sinister edge to the government's proposal. Do you agree? Sign in to have you say
Sir John Chadwick, a former Appeal Court judge, is tasked with designing a scheme that would give voluntary payments to the 'hardest hit' of Equitable's investors. He said that their relative loss would be worked out by studying the potential outcome of policies with similar but alternative pension providers.
On the face of it, this ought to be good news for long-suffering Equitable Life investors, hundreds of thousands of whom have seen their retirement prospects blighted by the insurer's effective collapse in 2000.
The problem is that Sir John Chadwick's report is not a serious attempt by the government to help Equitable policyholders. It is actually a cynical exercise designed to pay out as little as possible, using Sir John as the way to achieve this aim.
To understand this, you have to go back to why the government appointed him. Basically, it was brutally exposed by the Parliamentary Ombudsman Ann Abraham as having been in large measure responsible for what happed at Equitable Life. It was a failure to regulate Equitable effectively that led to the company's fall.
Under normal circumstances, any government is generally bound by parliamentary convention to make good on its failings. In this case, it means handing out compensation to those affected by the insurer's collapse.
Yet in this instance, the government has spent the last eight or nine years desperately trying to avoid having to offer redress to policyholders. Sir John Chadwick's appointment is part of the same process.
Indeed, his interim report does not reach a conclusion about which people could be considered the 'hardest hit' of Equitable's investors and will therefore receive any compensation. It is therefore likely that he will take many more months to reach this stage, possibly years. Meanwhile, up to 15 Equitable policyholders are dying every day before receiving any redress.
This is a disgraceful turn of affairs: in effect, the government is hoping to reduce its compensation bill by letting policyholders die.
Regardless of whether any of us are Equitable Life members or not, it is vital that we support them in their campaign for a fair payout. They were failed by the state and are entitled to be compensated for this failure.
More important, their fate is linked to ours. If they fail, the next time any group of people are faced with a similar problem, the government of the day will simply point to the previous example of what happened with the Equitable and give them a metaphorical two fingers. It could be you next."
Sky News, by Nic Cicutti - August 20, 2009
"Up to five million investors hold with-profits policies that are "doomed to fail" according to new research from a firm of financial advisers.
In total more than £150bn is invested in these troubled funds according to Matthew Morris, an specialist with-profits adviser. He said prospects for those with pensions, endowment and with-profits bonds in these funds is 'bleak'.
Research undertaken by 'exitwith-profits.co.uk' attempts to identify the good, the bad and the downright ugly funds within the with-profits sector.
Mr Morris said: 'There are 35 different companies in the UK offering with-profits funds. Some are closed funds, some are open, some offer conventional with-profits plans, others have unit-linked options, some are funds are 100pc invested in gilts, others offer a balanced portfolio, some have guarantees and others do not.'...
A list of funds most at risk include Axa Sun Life, Pearl Assurance, Scottish Widows, Phoenix Life and Equitable Life.
Mr Morris added: 'With-profits is a fundamentally flawed concept that does not work in today's economic climate. If anyone needed evidence of it they can get it from the past six months where stock markets have rebounded but penalties have increased on many of these funds.
'It's true not all companies' funds are doomed, but enough of the market has bombed out to cause great concern for millions of policyholders.'...
A spokesman for Equitable Life said: 'The Society invests mostly in fixed-interest investments so that we can meet the guaranteed benefits under policies when they are due to be paid. Investing mostly in fixed-interest investments helps reduce risk. It protects policyholders when share prices fall, but also limits the money the fund earns when share prices rise.' "
Emma Simon, Daily Telegraph 11 August 2009
"Surely the issue at stake is extremely simple? EMAG questions the wisdom of supporting Labour's poodle Chadwick and sought a JR to overturn it while ELTA apparently thinks Chadwick can be trusted(!).
I am truly astonished that after nine years of trying to bury the EL issue with obstruction, delay and investigations by parties given anodyne terms of reference, that ELTA somehow believes Gordon Brown has undergone a Messianic conversion, has found his long lost 'moral compass' and has decided to do the right thing. For heavens sake, read Labour's responses to Parliament's independent ombudsman!
You cannot trust Gordon Brown on this issue as far has you can throw him. Leopards do not change their spots and by supping with the Devil, EL victims can only be the worse off. It is surely to be regretted that ELTA did not back EMAG's stance, particularly as it represents only one class of victim.
I believe it was a gross mistake on behalf of ELTA that may yet come back to haunt us all. It cannot be undone so there is little point in having long exchanges regarding its perceived merits and deficiencies - that will only be used against us.
I fully support the PO's position and her objections to Labour's plans and hope that EMAG's JR will get the whole thing thrown out. Failing that, an incoming Conservative government may have more respect for the position of Parliament's independent ombudsman. With respect to compensation, both ELTA and EMAG would be at liberty to provide whatever input they see fit to the independent review body proposed by the PO. It would be helpful but not essential if both parties could reach agreement on this beforehand."
Ron Siddall, Motley Fool post: 78811
"MPs have just sloped off for three months of sand, sea...and dreams of the day they can enjoy their gold-plated pensions. But not before more than half (328) signed early day motion 1423 calling for Government compensation for Equitable Life policyholders whose retirement dreams were shattered by the mutual in the late Nineties.
Lax regulation of Equitable by an array of Government departments and financial regulators means that if ever there was an issue on which the Government should do a U-turn, it is this one. But the Government thinks otherwise.
The result is that last week Equitable Life's embattled policyholders were forced to take their case to the High Court. It shouldn't have come to this. It is time Equitable Life policyholders got the compensation they deserve."
Mail on Sunday, by Jeff Pretridge, 26 July 09
"A not very Equitable Life. Yesterday the government was in a hurry to get rid of all remaining business, so it can govern for 82 days without a Parliament to answer. In the process it can lead many to ask the reasaonable question, why can’t our MPs do their main job until well into October? The government used its majority to ensure the Commons had too little time yesterday to deal with the outstanding items, and to send us away for a long time.
Before we went the Speaker wisely granted an Urgent Question on the topic of Equitable Life. It has been the only sign of urgency around an issue where the government has dithered and delayed for all too long. The urgency was to follow up a government promise of a Statement on what compensation it was proposing before the summer recess.
The Chief Secretary to the Treasury gave a pathetic performance. He told us again that the government accepts many of the Ombudsman’s findings of maladministration by the regulators, yet it refuses to offer compensation. Instead he suggested some ex gratia payments to those who have lost out most.
Several of us asked for a deadline for the development of the scheme and for the payments under it. I also asked for some idea of how much would be paid on what basis to the losers. The Minister would not answer any of these basic and simple points.
This most profiligate and spendthrift of governments does at times combine being mean with a dogged determination to do the wrong thing. In the week of the helicopter shortage we witnessed that same lethal combination yesterday over the Equitable Life victims. Even Labour MPs looked astonished at the government’s insouciance, and told the Minister to get on with it.
When I was the Minister in charge of financial regulation, I inherited the Barlow Clowes mess. The findings of the Ombudsman in that case were clear - the regulators had failed. I did not hesitate. We compensated the victims at taxpayers expense, even though the last thing I wanted to do was to increase public spending for the sake of it. I felt we had to, as people had relied on regualtion and it had let them down. It is equally clear in the case of Equitable Life. What is the point of all this regulation, if when it goes wrong the government just walks away?
Yesterday it looked as if the government is happy for more delay, so more people will die who have lost money in this disaster. They looked like a government waiting for an election. I would love to be proved wrong, but I predicted they will not make a single payment before we go to the polls. The Minister did not protest at this. It felt as if the idea of ex gratia payments is just to get them through the Parliamentary embarrassment, and it did not even succeed in doing that very well."
MP John Redwood's blog, 22 July '09
"An equitable solution? There is still time for the Treasury to chose to backtrack, rather than being forced to. Today marks another step in the inexorably slow progress of the compensation claims of thousands of victims of the collapse, eight years ago, of Equitable Life. But though policyholders are heading to the High Court to ask it to force the Government to accept in full the compensation plans published a year ago by the Parliamentary Ombudsman, it is not too late for ministers to do the decent thing.
The Treasury had hoped that its response to the Ombudsman, unveiled earlier this year, would put a stop to this row. But only a tenth of those affected by Equitable's collapse – deemed by the Ombudsman to be as clear a case of regulatory failure as you'll ever see – stand to get any help under its proposals.
Equitable's victims, understandably, aren't too happy with that, and the support they have in this fight is unprecedented. For example, the Early Day Motion calling for the Government to reconsider its mealy-mouthed proposals has now been signed by a majority of voting MPs in the House of Commons.
With the High Court not due to reach a verdict before the autumn, there is still time for the Treasury to chose to backtrack, rather than being forced to. A U-turn might be embarrassing, but ministers' lack of shame over the Equitable affair has been far more humiliating."
The Independent by David Prosser 21 July 2009
"Stalling over Equitable is a shabby act. The Equitable Life debacle remains a running sore for the Government. Despite appointing retired judge Sir John Chadwick to look at setting up a severely limited compensation scheme to assist policyholders whose pensions were hit by the mutual's flirtation with financial meltdown in the Nineties, the Government continues to attract flak from MPs.
It is accused of trying to sweep the problem under the carpet. So far, 307 MPs, including 96 from the Labour backbenches, have put their name to Vince Cable's early day motion. The Liberal Democrat Treasury spokesman is urging the Government to accept the findings of the Parliamentary Ombudsman's report into Equitable.
The report, put together by Ann Abraham, recommended the swift payment of compensation to all those who lost savings at the hands of Equitable - not just the ten per cent that Chadwick's scheme is proposing to assist.
More than 130 MPs have also joined an all-party parliamentary group that aims to get financial justice for Equitable's policyholders. Last week, Daniel Kawczynski, its Conservative chairman, once again tried to put the Government on the spot over Equitable, only to be fobbed off by Harriet Harman, Leader of the House of Commons.
Although Harman said: 'We will make sure that Equitable Life policyholders get justice', the suspicion is that the Government hopes it can kick the Equitable Life affair into the long grass.
Certainly, the pace at which Chadwick is working - as reported in Financial Mail, he spends much time abroad on other business - suggests that by the time he comes up with any financial assistance proposals, Labour will be on a General Election footing. It seems unlikely that an assistance scheme will be in place before the country goes to the polls.
The shabby treatment of Equitable Life policyholders over the past eight years stains Labour's record in Government. The fact that more than 30,000 policyholders have died waiting for some form of justice should trouble the conscience of every Minister involved in passing the Equitable Life buck."
Mail on Sunday, Jeff Prestridge 12th July, 2009
"Speaker needs Equitable debate. The House of Commons has a new Speaker, John Bercow, elected after promising reform.
Backbenchers have long been ignored by Government, unable to hold the executive to account. That said, many backbenchers, as our coverage of the expenses scandal shows, have been little more than political jobsworths, treating the public purse like a lactating financial udder.
However, there are still some saints among the sinners. One of them is Vince Cable, the Treasury shadow for the Liberal Democrats. Apart from not abusing the expenses system, he has been one of the saner voices in Westminster during the financial crisis. His is exactly the sort of voice that the Government needs to be forced to listen to in the debating chamber.
If Bercow wants to begin making a reputation for himself as an effective Speaker he should start by allowing the 300 MPs who have signed Cable's early day motion on the Equitable scandal the debate, and vote, they crave.
The decision by Government to ignore the Parliamentary Ombudsman's findings of regulatory maladministration and injustice at the insurer (which was followed by a formal indictment of the Government by the statutory watchdog) represents Parliamentary abuse at its worst.
Those MPs who say they're keen to rebuild the reputation of the Commons should be jumping on it. Early day motions rarely get debated, although one such motion did lead to the change in Speaker that saw Bercow eventually dragged to the chair of course.
Cable's early day motion is no small irritant that the Government can ignore. It calls on the Government to accept the Ombudsman's recommendations on compensation. It is signed by very nearly half of all the MPs of this country.
What more invitation does the new Speaker need to show us his mettle – or is he going to prove as feeble as his predecessor?"
Damian Reece, Daily Telegraph 4 July 09
Susan Kramer (Richmond Park) (LD): "I particularly want to congratulate the hon. Member for Leeds, North-East (Mr. Hamilton) on obtaining the debate, because debates keep up the constant pressure. Although relatively little that is new happens between each of the Westminster Hall debates on the subject under discussion, the Government must know that the Members of this House are not going to go away. That is a critical message.
I also congratulate the Equitable Members Action Group, whose activities have made it clear that pressure from policyholders is not going to go away. It will continue, and they will have their day in the High Court, pursuing their judicial review, towards the end of July. I wish them the best. Perhaps most importantly I congratulate the 272 Members of Parliament who have signed the early-day motion. That is practically a voting majority in the House, particularly if we take into account the number of hon. Members who simply do not sign EDMs. I think it is the No. 1 EDM, if one can calibrate them in that way. That carries through the incredibly important message that were the motion to be put to the House, which, it seems to me, should be the ultimate decision maker, it would almost certainly pass, and would uphold the ombudsman and her report, and the decision for compensation. I join the others who have argued that as we look, now, to reforming the House, a crucial message is being given, to drive us towards creating opportunities for the House to have its say on such crucial matters.
I read with dismay the proposals from Sir John Chadwick on the approach that he would adopt and the issues to be addressed in his work on the Equitable Life ex gratia payment scheme. I know that I am putting words into his mouth, but between every line one discerns a great sense of virtual despair as Sir John repeats again and again that he is limited by the terms of reference that require him not to address any issues that have not been accepted by the Treasury. Going through the document one gets his sense that his work is practically pointless because it covers so few issues and can bring about so little compensation.
There have been discussions of the cost of compensation, but they come in the context of a banking crisis in which the Government have stepped in to rescue many individuals facing hardship, often, again, because of regulatory failure. The underlying principle that the Government should compensate for regulatory failure seems to me fundamental for a civilised society. We are not asking the Government to compensate for market failure.
The issue is one on which the House is exercised not only because of the victims— the Equitable Life policyholders—but because it represents the dismissal, once again, of Parliament’s voice, in Parliament’s Ombudsman. If that role is to have importance and strength Members of Parliament must stand behind the ombudsman. If we choose not to do so in a situation of this kind, where the case is so evident, we shall be ceding powers that should be retained by Members of the House, and not transferred even to so important a body of Government as the Treasury."
From the 90-minute Adjournment Debate in Parliament 24 June, 2009. The debate was sponsored by Labour MP Fabian Hamilton. Read the full transcript
"What do you think about pensions? Are they a good idea?
Oh dear, you've really touched a nerve there. I had all my eggs in Equitable Life's basket, so the wonderful, comfortable pension I should be living on, I'm not. That's not to say I don't have any pension, it's just nothing like what it should have been. It makes me very angry, especially when one of the policies was sold to me when they knew it was going down the drain.
I know there's a whole consortium of people who are battering the Government on our behalf. It'd be wonderful if they coughed up – maybe it'll happen one day. I worked so hard for that money and now I've lost half of it. It's absolutely unjust."
Ex-Avenger, Honor Blackman, inteviewed in Daily Telegraph 10 June, 2009
"Shadow chancellor George Osborne said the Tories will abolish compulsory annuitisation at 75 if the party is voted into power.
Speaking at the Association of British Insurers (ABI) biennial conference he said an abolition would be conditional on having sufficient income in retirement to avoid means-tested benefits.
Osborne also said the Tories want to "resolve the Equitable Life debacle in a way that is fair to policyholders and restores broader confidence in the industry."
He added: "We will produce more proposals in due course, but I hope that the savings and pensions industry will play its part in re-building our savings culture by providing products that are transparent, reliable and competitive."
Citywire, by Michelle McGagh, 9th June 2009
"Govt to be put on spot over Equitable Life
The former shadow home secretary David Davis has secured a 90-minute Westminster Hall debate on the Government's response to the latest Parliamentary Ombudsman's report on Equitable Life.
The debates in Westminster Hall (this one will be on 19 May) are one of the better innovations in Parliamentary procedure in recent years. They give MPs the opportunity to raise topical but often quite narrow issues like this and have a government minister answer the debate. Previously, these sorts of issues were squeezed in late at night in the main chamber and got very little attention. They take place in the large committee room just off the historic Westminster Hall and are open to the public, although the space is rather limited.
I expect next Tuesday to attract quite a few interested observers as well as a big turnout of MPs. This debate will be a chance to put the Government, in the shape of a junior Treasury minister, on the spot over its refusal to acknowledge the extent to which the failings of Government departments and regulators contributed to the demise of Equitable Life.
In particular, the refusal to even contemplate a proper compensation scheme has angered campaigners and their Parliamentary supporters.
What won't happen is for any sort of vote to be taken, as this is not part of the brief for Westminster Hall debates.
It might, depending on how it goes and the extent to which the Treasury continues to stonewall the Ombudsman's calls for justice for Equitable Life policyholders, pave the way for a full debate in the House of Commons.
This would probably have to be in opposition time but they may be willing to lend one of their debating slots to this cause if there appears to be a serious chance of embarrassing the government.
The trick for the Treasury will be to try to defuse this timebomb sufficiently to prevent this happening. The danger for the government is that MPs could decide this is an issue that might help them start rebuilding public trust in them after the expenses fiasco. Pressing for adequate compensation for pensioners who have lost out through government incompetence could play well in the current climate."
IFA Online, David Worsfold, 14th May 2009
"Ombudsman's Equitable Life report blasts the government for 'injustice unremedied'
The Parliamentary Ombudsman has added to the government's woes by giving ministers a rare public dressing down for defying her calls for proper compensation to be paid to Equitable Life policyholders.
In a report entitled Injustice Unremedied published today, Ann Abraham criticises the government for rejecting many of her recommendations relating to its handling of problems at the insurer.
This is only the fifth time in 42 years that the ombudsman has used its powers to lay a special report before MPs to highlight an "injustice" that has not been put right.
This has been described as the "nuclear option", available to the watchdog when it is totally dissatisfied with a public body's response to its findings. Previous follow-up reports have triggered Commons debates and led to ministers implementing recommendations they had previously rejected – raising policyholders' hopes that a multibillion-pound payout could at last be approaching...
MPs on the Commons public administration committee have already slammed the government for the "shabby, constitutionally dubious and procedurally improper" way it responded to Abraham's report and the main policyholder action group claimed the proposed payouts scheme "looks like leaving 90% of victims out in the cold".
Abraham said she was "deeply disappointed" by the Government's verdict, adding that it had made "highly selective" use of another report into the scandal to justify its position, and that this was "misleading".
"It provided insufficient support for the rejection of my findings of maladministration and injustice. It also begged a rather larger question as to what the purpose of regulation was supposed to be."
Paul Braithwaite, general secretary of the Equitable Members' Action Group, said now was the time for MPs, regardless of party, "to support their own Ombudsman and the sufferers of the injustices".
"With the Gurkhas, Parliament has shown it has moral fibre and teeth when something is manifestly wrong. We hope MPs will do the same for us, and the next step must be for parliament to hold the executive to account in the wake of the ombudsman's damning new report."
The Guardian, Rupert Jones 6th May 2009
"After the credit crisis, the pensions crunch...
...if Labour is not the only, or even the prime, cause of the pension crunch, it has done little to help and a great deal to make it worse. There have been some improvements, such as the Pension Protection Fund, a safety net for people who lose their pension when their employer goes under, yet the government had to be forced to help hundreds of thousands of people who risked losing their retirement income when their schemes were put into wind-up before the PPF came into effect.
Brown's disgraceful and heartless treatment of the Equitable Life victims continues even now, almost a decade after the collapse. After defying the verdict of the Parliamentary Ombudsman that a compensation scheme should be established, he sought to delay and minimise payments by appointing retired judge Sir John Chadwick to prepare a report on discretionary redress; I doubt Chadwick's deadline is pressing.
Back in 1997, one of Gordon Brown's first acts as chancellor was to launch a raid on tax credits on pension fund dividends, raising £5bn a year. It was not a move that impinged on most people's consciousness, though they will pay the price in retirement. Mervyn King is at it too: the Bank of England's quantitative easing (QE) programme is hitting annuity rates and causing pension fund deficits to widen. The combined deficit for companies in the FTSE 350 index has risen to £182bn from £163bn in the first quarter of this year, and QE has played a part in that.
What Brown learnt early on was that pensions were a good way of raising money without hiking headline tax rates. The government has abandoned its pledge not to increase the top rate of income tax, but is still raiding voters' pensions, in a way that would have gladdened the heart of that old rogue Robert Maxwell. Shouldn't we wise up?"
The Observer, Ruth Sunderland 26th April, 2009
"Equitable Life victims go to court over Governments 'shabby' response to claims.
The Government faces a High Court challenge over its failure to compensate more than 1 million policyholders who lost about £4 billion when Equitable Life nearly collapsed in 2000.
The Equitable Members Action Group lodged a claim for a judicial review after the Treasury's "depressingly predictable" failure to take action on the Parliamentary Ombudsmans call for a scheme that would assess all claims within two years. Instead, it promised discretionary payouts for those "disproportionately affected".
Paul Braithwaite, of the action group, said: "The proposed hardship scheme is totally inadequate, will take years to implement and looks like leaving 90 per cent of victims in the cold."
The 21,000 members of the group raised "hundreds of thousands of pounds" to retain Bindmans, the solicitors, and Dinah Rose, QC, who have together secured £8 billion in compensation for occupational pensioners.
Stephen Grosz, of Bindmans, said: "We have identified serious flaws in the Governments response to the Ombudsmans report and are asking the court to quash it, forcing ministers to think again."
In a report published last July, Ann Abraham, the Ombudsman, accused regulators and three government departments of maladministration, listing ten examples from a "decade of regulatory failure" before Equitable Life was forced to close for new business with liabilities of £1.5 billion.
Ms Abraham called on the Government to apologise to policyholders and set up an independent tribunal to calculate compensation.
In response, Yvette Cooper, Chief Secretary to the Treasury, apologised before Parliament, but said that the Government would pay out only to those policyholders "who suffered a disproportionate impact". She added that it was not generally appropriate for the taxpayer to pay compensation, even where regulators had failed.
The Commons Public Administration Select Committee said last month that it was "deeply disappointed" with the Governments decision, which it branded "shabby, constitutionally dubious and procedurally improper".
In a highly unusual step, Ms Abraham then wrote to MPs, saying: "It is clear . . . that, whatever the outcome of the work to be done by Sir John Chadwick [to advise on discretionary compensation], a full remedy will not be forthcoming for the injustice resulting from the maladministration I found had occurred in the prudential regulation of Equitable Life."
Sir Robert Atkins, the Tory MP who initiated an inquiry by the European Parliament into Equitable two years ago, was among others who accused the Treasury of "doing too little, too late". He criticised the Government for failing to value those who were trying to make provision for their retirement.
Mr Braithwaite said that the action group has asked the court to expedite the case and set an early hearing because of "the extreme delays since the scandal came to light, and the fact that an estimated 15 victims are dying each day without seeing redress". Several policyholders committed suicide in the wake of the crisis.
He added that the groups principal challenge concerned the Treasurys lack of "cogent reasons" for its refusal to accept several of the Ombudsmans findings.
He said: "Our members are truly outraged that this Governments shabby response is continuing to treat us with contempt.
"We are bewildered at the hypocrisy of its latest £1.6 billion bailout [for the Dunfermline Building Society], while we have been left to twist in the wind."
The Times, by Mark Bridge 15th April, 2009
"How irritating ombudsmen and select committees can be, making life irksome for government ministers who want to sweep a scandal under the Whitehall linoleum. That certainly seems to be Treasury minister Ian Pearson's attitude to the Equitable Life affair.......
Pearson used to be regarded as an affable Brummie.... A meek Lib Dem, Annette Brooke, asked how the government was getting on with agreeing compensation for Equitable Life policyholders........Brooke, who often looks as though a lion might gobble her up at any minute, warbled that the government's position had been described (by PASC) as "shabby, constitutionally dubious and procedurally improper."....
Hearing Brooke, Pearson snapped. Perhaps he thought that the fragile Annette Brooke could be easily crushed........He spat out his contempt for the public admin committee.. ...He piously said that the government had a duty not to hand out compensation without thinking long and hard. How refreshing to hear such parsimony from one of Gordon Brown's ministers. The Commons went bannanas..........
The minister was by now blushing and licking his lips nervously. He struggled to keep his voice on an even keel. Yet he repeated that he was "very disappointed indeed" that the government had been criticised. The committee did not appear to understand some of the arguments"...........
Pearson, who was later accused by the normally mild mannered Sir George Young of "declaring war on Parliament" was starting to realise he had dropped a major bollock (sic). He toned down his rhetoric, describing his disagreement with the public admin committee as "a technical dispute".. ...If that is so, why not accept the verdict of two outside bodies and get your arse in gear, chum?........."
Private Eye 3rd April, 2009, by Gavel Basher
Hansard, House of Commons, 26 March 09:
Annette Brooke (Mid-Dorset and North Poole) (LD): What progress has been made by the Chadwick review into compensation for Equitable Life policyholders? 
The Economic Secretary to the Treasury (Ian Pearson): Sir John Chadwick has begun the work that the Government asked him to undertake on aspects of the ex-gratia payments scheme that was announced by the Chief Secretary to the Treasury on 15 January. The Government will keep the House updated and report back on progress at regular intervals.
Annette Brooke: The Government's position has been described as:
"shabby, constitutionally dubious and procedurally improper".
It is clear that the parliamentary ombudsman does not think that injustices will be fully remedied. What assurances will the Government give that my constituents and other Equitable Life policyholders who have clearly suffered injustices will get justice delivered with speed, clarity and transparency?
Ian Pearson: I am very disappointed that the Public Administration Committee should choose to obscure the real help that it accepts the Government's payments scheme will deliver under extreme headlines, seemingly driven by an uncritical acceptance of the findings of the ombudsman's report and by its unjustifiable and irresponsible characterisation of the manner of the Government's response. [ Interruption. ] As a Government, we do not depart lightly from any of the ombudsman's findings, but— [ Interruption. ]
Mr. Speaker: Order. The hon. Gentleman is in order.
Ian Pearson: The Government do not depart lightly from any of the ombudsman's findings, but in such an important and complex case we have a clear duty to the taxpayer to ensure that our response is informed by a proper and comprehensive consideration of her report. That is what we have done and, as I have indicated previously, we want to move forward with an ex-gratia payment scheme just as quickly as possible. We are talking to Sir John Chadwick about the advice that he is providing.
Sir Patrick Cormack (South Staffordshire) (Con): Is the Minister aware that he has just made one of the most shameful statements to have been made from that Dispatch Box in many years? He has rubbished a Committee presided over by one of his own greatly respected colleagues, and discounted the unprecedented second letter from the ombudsman that we all received this week. He has had no support from the Benches behind him, as not a single Labour Member has risen to echo his words. He should be deeply ashamed of himself, because he is bringing the Government and the whole system into disrepute.
Ian Pearson: I have a lot of respect for the hon. Gentleman, who has a very long track record of upholding standards in this House, but we have departed from the ombudsman's findings only where we have clear and cogent reasons for doing so. We have applied scrupulously the terms of the Parliamentary Commissioners Act 1967, as interpreted by the Court of Appeal in the Bradley judgment. For no other reasons have we departed from those findings. I have to say that I remain very disappointed indeed that the PASC does not appear to have understood some of the arguments that we have made to it.
Mr. Mark Field (Cities of London and Westminster) (Con): May I associate myself entirely with the words of my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack)? I think he speaks for many people in the House, including many of the silent Back Benchers behind the Minister. What is the Minister now saying to all of our constituents? They are not unreasonable, and do not necessarily expect to get a share of the £4 billion that is being proposed, but are the Government simply waiting for many constituents across the country who relied on Equitable Life literally to die before there is any chance of getting any money on their behalf? Does he not find that a disgraceful state of affairs?
Ian Pearson: No, we are not saying that. We are saying that we want to move forward with introducing an ex-gratia payment scheme as quickly as possible to help those who have suffered "disproportionate impact" as a result of losses through Equitable Life. We shall continue to do that. The fact that we have a disagreement with the Public Administration Select Committee will not deflect the Government from moving forward with all speed and providing a remedy for Equitable Life policyholders who have suffered disproportionate impact.
Several hon. Members rose —
Mr. Speaker: Order. Condemning the Minister's reply is not what this is about — it is about asking a supplementary on the subject. I am sure Sir Nicholas Winterton will be able to do that.
Sir Nicholas Winterton (Macclesfield) (Con): I hope, Mr. Speaker, I do not let you down.
Is the Minister not aware that the way that Equitable Life policyholders are being treated is viewed — by the public, and not just the policyholders themselves — as another example of the way the Government treat people who have been responsible and prudent? Here are people who have tried to save for their retirement. The reports produced by the ombudsman have, in a way sadly, been critical of the Government, so is it not time that the Government speeded up the process to help people such as those who are losing out from virtually negative interest on their savings under the credit crunch, and to give them the benefit of their prudence and responsibility?
Ian Pearson: The ombudsman herself admitted that the issue was not clear cut. The hon. Gentleman will be well aware of the findings of the Penrose Report, which said that the company was largely responsible for the demise in the situation. We will continue to move ahead with all the speed we can. We have asked Sir John Chadwick to provide us with advice; we want to introduce a scheme and we want to make sure that we can offer a remedy to Equitable Life policyholders. There is a technical dispute between the Public Administration Select Committee and the Government, because we clearly do not agree with its report and we shall respond in due course.
Mr. Mark Hoban (Fareham) (Con): That was an extraordinary attack on an Officer of the House and a Committee of the House, and the Minister's comments will be noted across the country. They typify the Government's approach to the whole issue. At every step on the way, the Government have sought to block, frustrate and delay justice for Equitable policyholders. On Saturday, The Daily Telegraph nailed them completely. An early draft of the Treasury response to the ombudsman's report said:
"Sir John will aim to provide his final advice to Government by June 2010."
Is it not time for the Government to stop their shabby treatment of policyholders and give them a clear timetable for justice?
Ian Pearson: I and the Government have every sympathy for Equitable Life policyholders who have suffered genuine losses as a result of the failure of regulation, for which we have apologised. I have still not heard an apology from the Opposition for the period when they were responsible with regard to public bodies. Let us be clear. We have said all along that it is not normal practice for the Government to compensate for regulatory failure, and that is not the response just of this Government—it has been the response of successive Governments.
With particular regard to the date the hon. Gentleman gave, let me be very clear in response: we have said that we want Sir John Chadwick to advise us as quickly as possible and we want to make sure that we can introduce a payment scheme and make payments as quickly as we have the evidence, but we are talking about spending taxpayers' money, and we have to have regard for the public purse. We have to do the right thing in the right way, and we will do that as quickly as possible.
Hansard, House of Commons, 26 March 09
"Equitable won't go away. Happily, nor will Ann Abraham. Sometimes I wonder whether I will still be writing about Equitable Life when I reach pension age myself. It is the scandal that refuses to go away, because the government's cynical attempts at delaying and wriggling out of compensation mean a line cannot be drawn under the affair.
But policyholders have found a formidable ally in Ann Abraham, the parliamentary ombudsman. She is now saying in a letter to MPs, which I have seen, that she intends to take the highly unusual step of presenting a special second report into the scandal to both houses of parliament.
Her first report - its title, 'A decade of regulatory failure', is as clear as it is damning - said the government should set up a scheme to compensate victims, but ministers ignored her recommendation and instead appointed retired judge Sir John Chadwick to work out which policyholders had suffered most and how much could be attributed to official maladministration.
Her move follows a crushing verdict on the government's conduct last week from the public administration select committee, which found its handling of her initial report to be "shabby, constitutionally dubious and procedurally improper".
A second ombudsman's report is only issued when she concludes that the injustices laid bare in her initial findings will not be put right. Patently, this is the case here. In her letter, she says it is clear to her that "whatever the outcome of the work done by Sir John Chadwick, a full remedy will not be forthcoming". The Equitable Members Action Group is also refusing to give in; this weekend it took the first step in applying for a judicial review of the government's failure fully to implement the ombudsman's recommendations.
Brown has always been hostile to the Equitable victims and is now hoping their plight will be brushed aside in the crunch. Some feel the issue is a sideshow. But the government's failure to face up to the consequences of faulty regulation does not bode well for its handling of the banking crisis.quot;
Observer, by Ruth Sunderland 22nd March '09
" 'Shabby' response on Equitable Life.
The Commons public administration committee has said it is "deeply disappointed" with the government's "shabby" response to criticism of its handling of Equitable Life.
The government has stated it will establish a limited ex gratia payment scheme for a number of policyholders. But parliamentary ombudsman Ann Abraham wrote in her report that an apology ought to be made and an independent tribunal set up to look into paying compensation.
The PASC report, published today, describes the government's proposed payment scheme as "inadequate as a remedy for justice".
It criticised the government for ignoring the majority of the ombudsman's advice and for "choosing to act as judge on its own behalf... for reasons which are not well explained". And the report suggested that while the government might have a "legally valid position" not to pay Equitable Life policyholders compensation, it was not a "morally acceptable one".
The ex gratia payment scheme proposed by ministers for the worst-affected was described as the best that policyholders are probably going to get.
But the committee criticised ministers for choosing a "slow and onerous" process of means testing which would be "hard to access" and difficult to implement. Tony Wright, committee chairman, said: "I give credit to the government for apologising, for producing a considered response, and for accepting the need for some kind of payments scheme.
"But the government has produced an essentially political response to a quasi-judicial investigative report from the ombudsman, and as a result has ended up satisfying nobody." He added: "The government's arguments seem to me to leave a gaping black hole in the way our regulators are held accountable, and this needs addressing."
And speaking to the BBC this morning, Wright explained that the report was intended to show that Parliament takes the work of the ombudsman seriously. He stated: "I think that we took a very dim view of the fact that the ombudsman had made this extraordinarily detailed report, which she had taken several years to produce.
"Right at the end, the government started saying, 'Oh, well. We don't compensate for regulatory failure anyway'. "Had they said that at the beginning, we could have saved ourselves a lot of time and so could the ombudsman. The fact is that these people would have had no justice."
Instead, Wright called for a "straight-forward" compensation scheme run by an independent tribunal. But he added: "What the government has said is that they will have an ex gracia scheme for people, the grounds of which are still unclear."
Paul Braithwaite, general secretary of the Equitable Members Action Group, praised the "fantastic" report.
He told the BBC that it would be "very welcome" by the millions of people who suffered as a result of the collapse of Equitable Life.
"The government has been spinning and has been absolutely shabby in its treatment," he said.
"One hopes that this report will provoke MPs to stand up on behalf of their ombudsman."
And when asked about rumours that the Equitable Members Action Group would launch a judicial review, Braithwaite replied:
"We are enclaved with our lawyers."
ePolitiX, 19th March 09
"MPs say Equitable Life payout plan is 'inadequate remedy for injustice'.
The government is heavily criticised by MPs today for the "shabby, constitutionally dubious and procedurally improper" way it responded to a report into its handling of the problems at Equitable Life.
The Commons public administration committee said the scandal-hit insurer's policyholders had "good reason to be angry" about the way the government had "spun" its response to the parliamentary ombudsman's call for a scheme to be set up to compensate victims of the fiasco.
The MPs' report is likely to reopen the long-running debate over how much should be paid to those who lost money when the world's oldest mutual insurer came to the brink of collapse almost a decade ago.
A million customers saw their retirement savings slashed when Equitable was plunged into chaos by a court ruling. Campaigners have long battled for compensation, and last year it looked as if the government would have to pay out billions of pounds after the ombudsman, Ann Abraham, said she had found evidence of "serial regulatory failure" by the government departments and watchdogs that were supposed to be protecting the insurer's customers.
But when ministers made their response to her report in January, many customers were disappointed. In a statement to MPs, Treasury minister Yvette Cooper apologised to policyholders on behalf of regulators and successive governments for the "maladministration" that had led to the insurer's near-collapse. She said some policyholders who lost money may be entitled to redress, though payouts would focus on helping those investors who had been "disproportionately affected".
She rejected recommendations that the government offer compensation to all Equitable members. Instead, it decided to appoint a retired judge to study Equitable's books to work out which policyholders had been hardest hit and what proportion of their losses could be attributed to the maladministration accepted by the government.
In its report today, 'Justice Denied?', the public administration committee says the government's proposed payment scheme could help some policyholders, but is "inadequate as a remedy for injustice".
The MPs point out that the government acknowledged that public bodies were responsible for maladministration, and that some policyholders had suffered financial loss as a result. However, it was not proposing to pay these people compensation, but instead was setting up a "limited ex gratia payment scheme for an uncertain number of policyholders".
While the government's position might be legally valid, "we think most people would consider it to be a morally unacceptable one". They were concerned that the process ministers were following "looks set to be complex", and, therefore, probably "slow and onerous" for policyholders.
The report also said retired judge Sir John Chadwick's remit was "of limited scope" and, when his work was complete "the government, not Sir John, will decide who receives payments and on what scale".
They added that it was "shabby, constitutionally dubious and procedurally improper" for ministers to argue at the eleventh hour that parliament had accepted it was not generally appropriate to pay compensation even where there was regulatory failure.
They reserved some of their criticism for Cooper. While her January statement to MPs was not inaccurate, it had "left members and the public with an incomplete understanding of the government's position ... [She] should have been more explicit in her statement to the House about those findings made by the ombudsman which the government was rejecting or substantially qualifying".
Paul Braithwaite of Equitable Members Action Group (Emag) said MPs should insist on an urgent debate. "Emag wants proper compensation for all the victims of this scandal, not just charity handouts for a few. Parliament needs to stand up for the victims and for its own ombudsman, and make the government think again."
The Guardian, Rupert Jones 19th March 09
" 'Only we have the answers', insists Brown. Gordon Brown slumps forward in his chair as his perfectly tailored suit slowly crumples around his shoulders...
If Brown hopes to be feted as a major player on the world stage, he is likely to be brought down to earth with a bump when Alistair Darling presents the budget 20 days after the summit. This will confirm what even the most Panglossian supporters of the government have long accepted: that the recession is far graver than Darling forecast in last December's pre-budget report, placing Britain's public finances under the greatest pressure since the 1970s...
The prime minister observes convention by refusing to be drawn on what the chancellor will say in the budget on 22 April, but indicates that his growth forecasts will be sharply revised downwards and that his plans will be squeezed by tight public finances...
'I mean, laissez-faire has had its day. People on the centre-left and the progressive agenda should be confident enough to say that the old idea that markets were by definition efficient and could work things out themselves is gone. That doesn't mean to say that what government does is always right. What it means is that both government and markets have got to be underpinned by values...'
'I think it's essential that Labour wins the next election for the sake of the country,' he says."
The Guardian, Nicholas Watt 17th March
- "Why I've Said Goodbye To Equitable Life.
Malcolm Wheatley explains why he's cashed in his Equitable Life with-profits fund and invested directly in the stock market instead.
At last, there's good news for weary investors in under-performing personal pension schemes. And particularly so for with-profits policyholders of companies such as Equitable Life, who saw policy values barely budge as the FTSE 100 more than doubled from its March 2003 low of 3,287 to its July 2007 high of 6,716.
First, a warning: although I'm going to use Equitable as an example in this article, the option I'm describing applies to many more companies than Equitable. So if you have a with-profits fund as part of your pension savings, read on.
Two cuts in two months
A little over two months ago, on 31 December 2008, Equitable with-profits policyholders received some bad news: policy values were being reduced by 3%. So if, say, you had a policy valued at £30,000 on 31 December 2008, then on 1 January 2009 its new value would be £900 lower, at £29,100 -- ouch! And on 27 February, as markets continued to plunge, Equitable did it again, reducing policy values by a further 2%. That policy valued at £29,100 now became one worth £28,518.
But the point is this: those are the only reductions that Equitable has applied in the wake of the FTSE's fall from 6,716 in July 2007 to today's level of 3,700 or so. That's possible because only a small proportion of the Equitable with-profits fund is now in equities -- around 4%. Why? Because after the fund's collapse in December 2000, most of the fund was switched into fixed interest securities and bonds.
Meaning that in the past eighteen months or so, the FTSE 100 and related indices such as the FTSE All-Share have fallen much, much further than the fall experienced by Equitable's long-suffering with-profits policyholders. The markets, roughly speaking, have fallen by 45% or so, whereas Equitable's policy values have fallen by 5%.
Where's the upside?
The flip side of this, of course, is that when the market recovers, investors owning shares and index trackers will see a much greater increase than will Equitable policyholders.
In other words, there's a window of opportunity to leave Equitable, switch the money into the stock market, and experience a bigger gain than would almost certainly be the case if the money stayed in Equitable's with-profits fund.
Not every policyholder has the luxury of taking this route of course. Those furthest away from retirement and who have other assets to fall back on are in the best position to follow this strategy.
It's exactly what I have done with my own Equitable Life with-profits investments of £65,000 or so -- pension savings built up over two employments and a few years of self-employment before Equitable collapsed. I've opened a SIPP, transferred in my £65,000, and parked the lot in two low-cost index trackers, with the bulk of it going into a low-cost FTSE All-Share tracker.
Risky? Yes. Foolhardy? No, I don't believe so.
The window of opportunity that had opened was too good to miss, I judged. Equitable's 'market value adjustment' (the hit you take on withdrawing funds) was still a low-ish 5% (it had been much, much higher earlier in the decade), and the changes in the law relating to the protected right elements of my pension fund meant that I could take the lot out, rather than be forced to leave a few thousand pounds worth of protected rights pension messily trapped in Equitable's with-profits fund.
Will my pension fund effectively double, as the stock market returns to its former heights? I don’t know. But, like it or not, I'm going to find out."
"Investing Strategy", Malcolm Wheatley 13 March 2009
"Charles Thomson bids farewell to Equitable Life.
The chief executive of Equitable Life, is to step down after spending eight years at the helm of the UK's oldest mutual insurer.
It is understood that the 60-year-old has decided to leave the society, which has £6bn of remaining assets managed on behalf of about 500,000 policyholders, to seek new challenges. Sources said that he felt the job at Equitable has changed fundamentally since he took over in March 2001 when the mutual was close to collapsing.
Mr Thomson's departure will come as a surprise to the market as he has been key to stabilising Equitable, which fell dramatically from grace after being unable to pay guaranteed annuities. At its peak, Equitable was a £26bn business with 1.5m policyholders but was forced to close to new business in December 2000, resulting in up a million policyholders losing up to half of their savings.
His decision to leave the society is also unexpected as he has been lobbying the Government to pay compensation to policyholders who saw their investments disappear nine years ago......
His decision to leave is believed to be related to Equitable's announcement last November that it would not sell the rump of the business to a buyer. Despite having received approaches from Prudential, Legal & General and Swiss Re and being in exclusive talks with Royal London, it put the sale process on hold, blaming the current economic climate. At the time, Equitable said that instead of selling its remaining assets, it would focus on "running-off" the remaining business, allowing current policies to mature. This would, in theory, lead to the challenges facing management being scaled back.
Sources said Mr Thomson feels he has achieved the goals he set out when first joining Equitable when it was in turmoil, and has overseen a period in which the society's finances have stabilised and strengthened.......(!) "
The Sunday Telegraph, by Yvette Essen 1st March, 2009
"Equitable Life: 'Nine out of 10 victims will get nothing from the Government'.
Members are 'outraged by the Prime Minister's hypocrisy', says the head of the Equitable action group.
Despite belated and begrudging government promises of compensation, long-suffering policyholders with failed insurer Equitable Life should be prepared for disappointment.
The Equitable Members' Action Group (EMAG) believes that nine out of 10 Equitable Life victims will be excluded from the carefully crafted "hardship" scheme proposed by Yvette Cooper, the Chief Secretary to the Treasury.
EMAG has been fighting for more than eight years for justice and compensation for the repeated failure of the financial regulators. I'm sad to say that the scales have fallen from our eyes as we've witnessed the tactics to which the Mandarins in the Treasury have sunk, over and over, to delay and deny us justice.
Investors in Equitable Life, where the hopelessness of financial regulators surfaced first in 2001, have suffered every single shabby trick in the book at Sir Humphrey's hand.
You might have expected, when Parliament's own Ombudsman, Ann Abraham, presented her damning report in mid-July last year, a searing indictment of maladministration and injustice by regulators for more than a decade, that the compensation she recommended would follow swiftly from the tribunal she proposed.
This was game and set but, sadly, not match to EMAG and the complainants. Unfortunately, the Treasury saw things differently.
In Parliament on January 15, Ms Cooper gave the appearance of delivering a fulsome apology. She implied acceptance of the Parliamentary Ombudsman's report and announced the appointment of a retired senior judge, Sir John Chadwick. What she didn't reveal was the devil in the detail in the command paper - released hours later - which was totally at odds with the tone of her statement.
The "ex gratia" payment scheme and the Treasury's instructions to the retired judge were all restricted to only the few Ombudsman findings which the Government chose to accept. It's hard to credit the brass-neck sophistry she perpetrated and it's not just the victims that were duped, it's our MPs too.
Incredibly, most have yet to realise that we've all been "had" yet again, with no prospect of any payments this side of an election and many more victims dying waiting, which flags up the likelihood that the Equitable scandal can and will become a vote-influencing electoral issue.
The Treasury has rejected, with scant explanation as to why, three out of four of the big issues that warrant proper compensation. The Ombudsman put the start date for injustice as July 1 1991, when the Equitable's 1990 regulatory return was filed. In doing so she included as potentially eligible for compensation all of the million-plus savers who entrusted their money, mostly pension money, to Equitable Life after that date.
But the Treasury has totally ruled out these three big-money findings, leaving just one admitted injustice perpetrated in 1999. This relates to the Financial Services Authority knowingly allowing a worthless so-called "reinsurance contract" to be valued - in order to keep Equitable nominally solvent - as a real asset valued at £800m.
It is this movement of start date by eight years out of the possible 10 that would exclude most policyholders from receiving any compensation. EMAG's accountants, Burgess Hodgson, have done the sums and reckon that this reduces the eligible losses for compensation by 90pc.
The Treasury's proposal is to make ex-gratia payments (not compensation) to individuals who have suffered "disproportionate effect" and can demonstrate their dependence on income from their Equitable policy. Sir John will advise on this. The process looks like an attempt to give a veneer of judicial respectability to a cheapskate hardship scheme.
EMAG recently made the case for Sir John's appointment to be set aside in favour of the original independent tribunal process proposed by the Ombudsman, which would dispense fair compensation - not cut-price charity.
Amazingly, after eight years' struggle, EMAG has 21,000 paid-up members and has never been stronger. This is because of deep-felt outrage at the hypocrisy of such humbug as "Fairness is in our DNA" - a claim made by our Prime Minister. Those who've lost out simply can't understand why depositors with banks such as Royal Bank of Scotland and Icesave have been fully protected, yet Equitable's pensioners are left to swing.
It seems that we, the victims, will have to intensify our political fight for justice.
We have been greatly helped by the crusading support of The Telegraph. What sufferers can do is to contact their MP, asking him or her to stand up for their own Ombudsman and to say no to the fudged process proposed. They should also get involved with their local EMAG regional group via: www.emagregional.org.uk
Sunday Telegraph 15th February, 2009
by Paul Braithwaite of EMAG
"At the Public Administration Select Committee hearing on Wednesday 11th February, Treasury Minister Ian Pearson MP set a new low in his department's strategy to delay or deny justice to Equitable Life policyholders. After a four-year investigation, Ann Abraham the Parliamentary Ombudsman found the Treasury (through its subcontractor the Financial Services Authority) guilty of five out of ten counts of maladministration during what she described as a ‘Decade of Regulatory Failure’………
Mr Pearson claimed that the Treasury had no idea of how much had been lost by Equitable Life policyholders. This is in spite of the fact that in 2001 the then FSA Chairman Sir Howard Davies reported to the Treasury that the cost of reimbursing policyholders’ losses, measured against the performance of competitors’ products, would be between £3 and £5 billion. This is the same yardstick recommended by the Parliamentary Ombudsman and used by EMAG. The Treasury has been delaying and dodging liability ever since. It has a full-time team working on the project. Does Mr Pearson really expect anyone to believe that the Treasury does not have a copy of this report?
He also claimed that he "did not recognise the figure of 90%" which EMAG reckons would be excluded from compensation by the Treasury's instructions to Sir John. This is in spite of our figures being presented and discussed at some length at the previous PASC meeting on 29 January. Did Mr Pearson not watch the video? Did his experts not study EMAG's figures? Does he not realise that by excluding eight year’s contributions from a decade of maladministration one necessarily makes a very substantial dent in the compensation bill?
Mr Pearson even claimed that his Department’s main intention was not to reduce the cost to the Treasury. So why does it reject three of the four most expensive findings of injustice? And why is Sir John Chadwick instructed to consider, in respect of the "lucky" 10%, a range of deductions which would reduce the bill even further?
To devise the compensation scheme, the Parliamentary Ombudsman suggested a tribunal, which would be independent, transparent, rapid and answerable to Parliament. The Government's proposed alternative scheme is none of these. Under the Government’s proposed alternative, the Treasury has appointed retired Lord Justice of Appeal, Sir John Chadwick, to conduct a process, which Ian Pearson repeatedly described as "independent". But the Treasury has selected Sir John, written his instructions, will pay him and provide him with manpower. He will advise and report to the Treasury, which will modify any of his conclusions that it does not like. Just how independent can this process be?
In his last days in the Court of Appeal, Sir John Chadwick gave the leading judgement in the case of Bradley v. the Department of Work & Pensions. In this, he defined the grounds upon which a Government minister may reject the Parliamentary Ombudsman's findings and who should be eligible for compensation when Government departments issue misleading messages. Both matters are highly relevant to Equitable Life, so surely that makes him uniquely qualified to provide legal advice? Well yes, except that retired judges are firmly instructed by their Code of Conduct not to advise anyone on legal matters. As the Judges’ Council Working Party put it, "the track record of being a judge is commercially saleable, but should not be on the market." Does Mr Pearson really expect us to believe that Sir John will not be providing any legal advice to the Treasury?
PASC Chairman Dr Tony Wright MP quoted witnesses who suggested that, if Sir John was not appointed to advise on the law (and he is not qualified as an actuary or accountant to advise on the money), then perhaps he was appointed to add a judicial veneer to this Treasury-inspired and controlled process. He also quoted former Lord Chief Justice Woolf as being concerned about such a practice. Mr Pearson described this suggestion as "uncharitable and unworthy"………
Over the last 10 years this Government has undermined the integrity of the Civil Service, and the appointment of a retired judge to do the Treasury's bidding in a one-sided quasi-legal process suggests that it is also intent upon undermining the integrity of the Judiciary. The Treasury's current action is only part of this ongoing process…
Colin Slater, EMAG director Motley Fool
13th Februry, 2009
"Equitable Life members move to block compensation judge. Equitable Life members today challenged the government over its decision to appoint a retired judge to advise on compensation for policyholders, saying the move appeared to be in breach of official rules on judicial conduct.
The Equitable Members Action Group (EMAG) said last month's decision to appoint former Appeal Court judge Sir John Chadwick to advise the government was arguably "an abuse of power" because it appeared to contradict the official "guide to judicial conduct," which prohibits retired judges from providing legal advice. The claim came in a letter from Emag's solicitors, Bindmans.
Emag called on the government to cancel Sir John's appointment and rethink its proposals on compensation which, it claimed, would leave more than 90% of the Equitable Life scandal's victims with nothing. EMAG has sent copies of the correspondence to the Treasury, the Lord Chief Justice and the Lord Chancellor.
Last month, the government announced Equitable policyholders who lost money in the insurer's near-collapse in 2000 could be entitled to redress, though it could take at least two years for the payments to be made. In a statement to MPs, Treasury minister Yvette Cooper apologised to more than a million policyholders on behalf of regulators and successive governments for the "maladministration" that had led to the insurer's near-collapse in 2000.
She said the government would set up a payment scheme for policyholders which would focus on helping those investors who had been "disproportionately affected" by the events at the insurer, which was brought to its knees after a court ruled it had to honour guarantees made to pensions customers.
Cooper rejected recommendations from the parliamentary ombudsman that the government should offer compensation to all Equitable members. Instead, the former judge is being asked to study Equitable's books to work out which policyholders had been hardest hit, and what proportion of their losses could be attributed to the maladministration accepted by the government.
Paul Braithwaite, of EMAG, said today: "The process proposed is nothing more than a cheap trick to lend a veneer of judicial respectability to a dodgy hardship scheme."
The guide to judicial conduct states that retired judges must not "offer or provide legal advice to any person". Stephen Grosz, head of public law and human rights at Bindmans, said the decision to instruct Sir John: "appears to contradict the Lord Chancellor ... It may be argued it is irrational and/or in breach of a legitimate expectation, and in consequence an abuse of power, for the government to appoint Sir John Chadwick to advise it in such a matter as this".
Rupert Jones in The Guardian, 10 February 2009
"Treasury has been allowed to have the last word over Equitable Life findings. Sir, You report ("Treasury under fire over Equitable", January 30) on parliamentary ombudsman Ann Abraham's justifiable irritation with the reactions of Yvette Cooper, the chief secretary to the Treasury, to her report. Something that has not been picked up by the FT is that, following the parliamentary statement, the Treasury published a command paper explaining in some detail which of the ombudsman's findings it accepts and which it does not, and why.
In this paper the government rejects about one half of the findings of both maladministration and injustice. Then, in his terms of reference, Sir John Chadwick is told very clearly that he must disregard those of the ombudsman's findings that the government does not accept.
At each stage of her process Ms Abraham gave the regulatory bodies the chance to comment on her proposed findings and then gave very thorough and carefully considered arguments as to why she held to her conclusions.
The Treasury has now been allowed to have the last word. A parallel would be allowing the defendant in the dock the final say in whether or not he accepts the jury's verdict.
If this is the way the government intends to handle reports from the ombudsman, surely it would be more honest to close the office down and let the departments decide when there has been maladministration.
From Mr Roy Colbran, Financial Times, 6th February
"When Parliament turns its guns on a man, life isn't so equitable. It's not too late to get interested in this. The thing's been four years coming and it'll be four years going. It's full of material for those who like to consider the efficacy of regulation, the ethical superiority of government to the market, and whether Parliament has any gumption any more. Equitable Life. I'm only just catching up with it. In front of the Public Administration Committee, the Parliamentary Ombudsman started out with all guns blazing, albeit in that muffled-muzzle way that public officials have. Nonetheless, it was possible to discern her acrid discontent.
Anne Abraham's report on the failure of the £30bn insurance company with its 1.5m policyholders has been rubbished by the Government. She had found 10 cases of maladministration, five of which led to injustice, and were therefore worthy of redress.
That's an expensive conclusion,so the Government reworked her evidence, made up some of its own, inserted a proposal to means-test compensation, and made any payment at the discretion of ministers. But perhaps not confident that this would muddy the waters enough, they've appointed an Appeal Court judge to advise, at his leisure, on who should be paid what.
His recommendations will then be passed on to be ignored by ministers (no doubt in a different government). It's a ministerial master class.
The Equitable Members Action Group gave us the chance to see one Colin Slater in action, a man on whose face was written a saga of worry, duty, care and disappointment. He showed us how cleverly the conditions of compensation had been constructed. The only cases of a) maladministration leading to b) injustice with c) real money attached to them stem from 1999 and the combination excludes 90 per cent of policy holders.
Bang. There it is. Or isn't. Mr Slater's harshest words were for Judge Chadwick, "the Treasury's hired hand" who was "giving a judicial veneer to what is a back-street process". He said: "What sort of court is it that the accused appoints the judge... to hear its appeal in private and to report at a time and place of its own choosing?"
David Heyes MP made the most depressing observation. He'd been urged to "stand up against the Chadwick process". He said there was nothing more that Parliament could do about Equitable Life. There had been a statement by a minister. There had been a debate in Westminster Hall. Instead, he advised the action group to exert itself some more (they've been hacking at this coal-face for many years already).
As one of the group said: "She's your parliament, and you must stand up for her." Ah, yes. The impossible dream. Parliament first!
And finally, perhaps the most pessimistic thought about the thickets of feckless regulation in the City: "A right without a remedy isn't a right at all. It's just a statement of honourable intent."
Or, words, words, words.”
The Independent Simon Carr, 30 January 2009
Read the press coverage of the select committee session 29th January.
Letter from a member to his Labour MP 24th Jan '09
"I have been following closely the damning reports in the press that followed the Statement in the Commons by Yvette Cooper, Chief Secretary to the Treasury, on 15th January. I wonder if you have seen the the Command Paper 7538 from the Treasury, which appeared hours after that Commons session? I do urge you to read it, and weep aloud.
The REAL mealy-mouthed process proposed is buried in that Command Paper, but both it and the Statement selectively misquoted the Parliamentary Ombudsman's and the select committee on Public Administration's reports to make them appear to be saying the exact opposite of what was intended.
I am hoping that you will be in the Westminster Hall on Tuesday 27th January at 11am when Lib Dem MP Steve Webb has sponsored a 90-minute debate. Will you add your vocal support for wronged Equitable investors? It would seem a grave problem is that many MPs (and annuitants) are under the false impression that Equitable is sorted and they can breathe out. That is simply not the case.
Judging from the scathing comments in the quality press the snub by the Treasury to the PO, the PASC select committee and the European Parliament, this is likely to become a big issue which will not serve Gordon Brown or this Government any favours in the next election.
For the first time the Government has admitted that the regulators failed and that there was maladministration. That being the case there should be a proper remedy, as seen with recent bank failures. What we don't need is yet more of the same obfuscation and delaying tactics, adding insult to injury, compounding this gross injustice and human misery.
Due to the severely restricted terms of reference of Sir John Chadwick's remit and the fact that the Treasury is under no obligation whatsoever to act on his advice, the process set up by the Treasury, the villains implicated in five of the PO findings, falls very far short of satisfatory.
For myself, and the hundreds of thousands of other Equitable victims, many now to old or infirm to fight their own corner, I would plead with you to help and speak out for fairness for those whose prudent planned retirement has been dashed through no fault of their making.
We will continue to demand proper compensation and an independent tribunal to assess compensation for Injustice. We reject means-tested ex-gratia handouts that are assessed against "disproportionate affect" - whatever that means."
"One of Labour's shabbiest episodes
The problems of Equitable Life are rooted in the late 1980s and early 1990s and were due to the way it tried to handle generous guaranteed annuity rates. Because it ran a Ponzi-like fund, it declared over-large bonuses to policyholders so as to announce good results and promote growth. The government as regulator did nothing, but by 1998 the Treasury realised that it was in a financial mess.
The Treasury and its agent, the Financial Services Authority, first tried to pretend Equitable was viable by allowing a deceitful piece of financial flummery to window-dress the regulatory accounts. After Equitable lost a court case in July 2000 and failed to find a buyer, the problem of excessive bonuses became apparent in 2001. The Treasury/FSA then ran a campaign to cover up what had happened and to stitch up the policyholders. They aimed to expunge policyholders' rights to take legal action; to delay by inviting Lord Penrose, a judge and accountant, to write a history of what had happened, which did not apportion blame to the regulator; and to obfuscate. Ruth Kelly, former financial secretary, economised with the truth in parliament when reporting on Lord Penrose's report.
In 2004 the parliamentary ombudsman took up the cudgels and after four years - a period lengthened by Treasury delaying tactics - she reported last July on "a decade of regulatory failure". She found maladministration on 10 counts. Five related to the early Conservative years and five to Labour years. She found injustice causing loss resulting from five of the maladministrative actions. She recommended that the government apologise to policyholders and compensate them for losses incurred as a consequence of the maladministration. In December the Commons public administration committee agreed with her, stating: "Where regulators have been shown to fail so thoroughly, compensation should be a duty, not a matter of choice."
Yvette Cooper, the financial secretary, finally gave the government's response on Thursday. She apologised, but money is limited to what is called "a fair payment scheme for policyholders who have suffered a disproportionate impact". This is not compensation, but a means-tested payment that will be available to a minority of policyholders. Devising a scheme and checking paperwork will doubtless take a significant time - so more elderly policyholders will die. She justified this approach, which does not comply with the ombudsman's recommendation, with selected phrases from Lord Penrose and the ombudsman taken out of context and some dissembling claims, including that the issues are complex. They are, but the Treasury has had seven years to think about them. The first rationale for the approach is the old canard of Lord Penrose that: "Principally, the society was the author of its own misfortune." Agreed, but the point of having a regulator is to ensure management keep on the rails. Politicians who parade this argument - like most public employees, many of the retired officials responsible for the maladministration, and Ms Kelly and Ms Cooper - have pensions guaranteed by tax and ratepayers. They do not have to worry about the performance of any management or regulator.
The second rationale was that the "taxpayer should not provide a remedy for all losses every time the regulator fails to prevent a financial institution getting into trouble", a statement contrary to the Treasury's own guidance on compensation. We are not talking of an odd slip-up. We have a decade of multiple failures, including a failure by government to apply the legal regulations intended to stop such failures. Furthermore, every year we paid the government for the service. We have a right to expect it to regulate properly and not mislead policyholders.
Why pay depositors in Icesave, who went for a high-return product, and not people who saved for their pensions and relied on the government as regulator to ensure that a very complex product was secure? The approach is one of Gordon Brown's policies that have undermined private pensions and created two pensioner nations.
The treatment of the policyholders of the Equitable has been one of the shabbiest episodes of this government. It reflects no credit on the integrity of the government, let alone Mr Brown's claim that: "Fairness is the [Labour party's] DNA.' Instead we have had delay and dissembling. We now hope Parliament will redeem itself and insist on holding a debate; we demand justice not charity. We will look to see if we can take legal action against the government either in England or Europe.'
Financial Times, by Alex Henney 16th Jan 09
"TREASURY FINALLY OFFERS PAY-OUTS TO EQUITABLE VICTIM.
Government compensation, ministers will announce.
The Treasury is understood to have conceded that regulatory failures were partly to blame for the investment firm's collapse and that some pay-outs will be made……………….
Yvette Cooper, the Chief Secretary to the Treasury, is expected to tell MPs that the Government will establish an independent tribunal to calculate the level of compensation that should be paid.
Ministers may also formally apologise for regulatory failings in the run-up to Equitable's collapse.
The Government announcement marks a climbdown by ministers who have argued for more than eight years that they cannot be held accountable for the failure of Equitable Life.
It will prove embarrassing to Gordon Brown since he ran the Treasury - which oversaw the regulators responsible for the crisis - during much of the period when failings were identified.
Campaigners have demanded more than £4 billion from the Government. More than one million people - mostly middle-class professionals - lost up to 50 per cent of their savings, totalling tens of thousands of pounds in many cases.
15 victims of the scandal are said to be dying every day without receiving what they are owed.
However, the final compensation payments are likely to be much lower as the tribunal is expected to rule that regulators and the Government can only partly be held responsible for Equitable losses.
As part of the announcement, the Treasury will be very careful not to admit any culpability.
Treasury sources said that they are anxious not to establish a precedent for people suing for compensation over other financial scandals particularly as the recent financial crisis has led many to question what role the authorities played in failing to spot the looming disaster.
Miss Cooper is also likely to point to the role that company itself played in Equitable's collapse. She will stress to MPs that the Treasury's role was not central to what happened.
A Treasury source said: "The company was not an innocent party. That has been established by the independent reports and is pretty much conceded by everyone.
"It was also clearly an issue for the authorities. But there needs to be a realisation that you cannot have a zero-failure regulatory system.
"We are very mindful that when you are talking about taxpayers footing the compensation bill then you need to be cautious."
There will be a detailed look at which victims are entitled to compensation…………………
However, the statement is unlikely to satisfy some policyholders who have campaigned for eight years to get their money back.
Paul Braithwaite of the Equitable Members Action Group said: "The risk of a tribunal is that we will face further delays for what is now a terribly overdue necessity. We are not seeking charity, this is about a right to justice."
Deciding on how much compensation should be paid is likely to be a complicated process. The tribunal will have to compare how much Equitable Life investors should receive if the regulatory failures had not occurred.
Equitable Life is accused of paying out too much in investment returns in the 1980s and 1990s which meant it had inadequate reserves. The firm's payouts to customers are likely to be compared against a "basket" of rival investment schemes
Last summer the Prime Minister was personally criticised by the Parliamentary Ombudsman, Ann Abraham, for failing to set up an inquiry when he was Chancellor into Equitable Life in 2001 - a decision described as "iniquitous and unfair" in the official report.
The Ombudsman ruled that the Department of Trade and Industry, the Government Actuary's Department and the Financial Services Authority (FSA) were guilty of "serial maladministration" .
Those findings have forced the Treasury to finally look at compensating victims, despite initial indications that ministers would seek to block payments.
However, the recent financial turmoil - and the bailout of savers in Icelandic banks - is thought to have led officials to advise that this position may not be tenable. But, the Treasury remains wary about setting a precedent for paying compensation for regulatory failures………
The Conservatives have already pledged to set up a compensation scheme if elected, so the announcement is likely to be welcomed.”
Daily Telegraph, by Andrew Porter and Robert Winnett 14th January, 2009
"Equitable pay-out verdict imminent
More than 1m members of Equitable Life are set to find out as early as next week if the government will bow to pressure to compensate them for the losses they suffered when the mutual came close to collapse eight years ago.
The government is expected to deliver its response next week to a damning report by Ann Abraham, the parliamentary ombudsman, which said Equitable members were the victims of a decade of regulatory failure and should be compensated.
Yvette Cooper, Treasury chief secretary, is scheduled to make a Commons statement next week. Gordon Brown had originally promised a statement before Christmas.
The Treasury on Friday refused to comment ahead of the Commons statement.
However, Equitable members are hopeful that the government will accept the parliamentary ombudsman’s findings and agree to pay compensation, which could run into billions of pounds.
They interpret the government’s postponement of its response as a sign it is set to bow to pressure from backbench MPs to pay compensation. The Commons public administration committee has urged redress without delay.
Paul Braithwaite, general secretary of the Equitable Members Action Group, an independent association of Equitable members and policyholders, said: "[We are] hopeful we have turned the corner and that the government has finally acknowledged the need to address the injustice and to provide closure."
Mr Braithwaite was optimistic that not only would the government pledge to compensate members who lost out, but a tribunal would be set up to facilitate this, and that there would be an immediate interim payment to pensioners.
However, other people who have been following the situation believe such optimism may be misplaced. They suggest the government’s response may not be clear cut. While it may not reject Ms Abraham’s report altogether, for fear of an outcry, it may not rush to compensate policyholders either.
One observer thought the government could accept some parts of the report, but not others, and any moves to pay redress would come with caveats. "It is going to be a very grey area," he said.
Last month, Ian Pearson, economic secretary to the Treasury, told the public administration committee the government had not yet carried out detailed work on how much it would cost to compensate policyholders."
by Andrea Felsted 10th January 2009
(Sent from EMAG by post to all 646 MPs on 5th January, 2009)
"Equitable Life – the need for fair closure
Equitable Members' Action Group (EMAG) seeks to speak on behalf of ALL former and current Equitable Life policyholders, the majority of whom lost a sizeable part of their pension savings following the near collapse of Equitable in 2001.
EMAG's view - that policyholders' serious losses are directly attributable to serial regulatory failure - was fully vindicated by the Parliamentary Ombudsman (PO) last July in the report "A Decade of Regulatory Failure".
The government has promised to respond with a statement in the week of 12 January. We very much hope that ministers have finally taken heed of the strength of feelings on all sides of the House about this injustice. As you may know the Public Administration Select Committee has recently - without reservation - backed the PO’s findings and recommendations. The fifth conclusion of its own report "Justice Delayed is Justice Denied", published on 15 December, is that:
"We strongly support the Ombudsman's recommendation for the creation of a compensation scheme to pay for the loss that has been suffered by Equitable Life’s members as a result of maladministration. Where regulators have been shown to fail so thoroughly, compensation should be a duty, not a matter of choice."
This was the fourteenth report into the Equitable scandal but ONLY the PO's report was remittted to make recommendations of compensation. Whilst the Penrose 2004 report, which was the bedrock for the PO’s investigation, observed that Equitable was "principally the author of its own misfortunes" the same paragraph continued: "… the practices of Equitable’s management could not have been sustained over a material part of the 1990s had there been in place an appropriate regulatory structure".
The PO, Ann Abraham, recommended that the compensation scheme should be decided by Parliament and that a totally independent tribunal should be convened to assist in dispensing all compensation within two years. EMAG is concerned that the chair appointed must be impeccably impartial and untainted by any association with government. We trust that Parliament will ensure that the government acts properly to this end.
We hope that you will speak up for the several hundreds of your constituents affected and that you will play a part in ensuring a swift and fair resolution to this festering injustice that has done such damage to trust in our regulators. Since 2001 more than 30,000 pensioners have died waiting for justice, with an estimated 100 more dying each week.
Attached is a two-page précis of recent developments.
"Start new year by ending Equitable saga
Wouldn't it be brilliant for the Government to start the New Year by agreeing once and for all to deal with the long-standing Equitable Life scandal by at last giving compensation to policyholders?
A decision to compensate or part-compensate policyholders for the losses they suffered as a result of systemic regulatory failure - or perish the thought, ignore their financial grievances - was due before Christmas. But the Government decided it needed more time to cogitate.
Although some Equitable Life policyholders, most of them elderly, were understandably angry, others felt the delay was a good sign, concluding that Labour was changing its mind on the issue.
Hitherto reluctant to compensate, it seems the Government has now come under extreme pressure from many of its own backbenchers - especially those in marginal seats - to pay up.
If there is any justice, the Government will do the decent thing and compensate. It's what nearly everybody else who has looked into the sorry saga - the Parliamentary Ombudsman, influential House of Commons select committees and the European Parliament - has recommended.”
Jeff Prestridge, Mail Personal Finance Editor, Mail on Sunday 27th December 2008