The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

Correspondence: 11/03/2003 - Letter from Paul Braithwaite to Tony McGarahan of ELAS

11 March '03 - Letter from Paul Braithwaite to Tony McGarahan of ELAS

Dear Mr McGarahan,

Re: Parliamentary Ombudsman

On March 3rd you wrote to me, explicitly on the issue of the Parliamentary Ombudsman, including the following paragraph:

"Our position is that, if Lord Penrose is critical of the regulatory supervision of the Society, then the Society's board would seek financial redress from the appropriate Government agency on behalf of our policyholders. Any action is subject, of course, to appropriate legal advice. Therefore we do not believe it is appropriate, at this juncture, to call on the PO to extend her brief."

This answer is disingenuous and it doesn't addresses the question posed.

The repeated simple request from "E 7" (and EMAG) has been for the board of the Society to back our combined call on the P O without further delay to broaden her existing investigation of regulatory maladministration to embrace the 1990s.

It is NOT a request for the Society to initiate a new legal redress process at this time. It's asking, with absolutely no known ramifications, for the board to back an initiative that COULD possibly lead directly to a requirement of Government to pay compensation, possibly measured in billions, to policyholders present and past.

And it would certainly cost the Society NOT ONE PENNY.

Some policyholders might regard the board as being deliberately obstructive and in dereliction of duty in not embracing such an obvious and prospectively rewarding avenue.

On March 4th, on EMAG's behalf, I wrote a submission to the Public Affairs Select Committee (available on EMAG's website). I included:

"The Penrose Inquiry is looking at "lessons to be learned for the industry" by evaluating ALL surrounding circumstances over a 50 year period. It reports to the Treasury who will determine what and when it is published. By way of contrast, the office of P O is exclusively focussed on evaluating maladministration, and reports to Parliament - a very important distinction when the Treasury itself is a possible culpable party."

You must know that Penrose's remit does NOT embrace addressing liabilty. Nevertheless, you wrote an ambiguous turn of phrase:

"So far as action against the regulators is concerned, the current inquiry led by Lord Penrose is considering these matters."

This issue has kindly been explained at length to EMAG by Hugh Burns, secretary to the Penrose Inquiry, in the following unequivocal terms:

29th January, 2003 from the Penrose Inquiry to EMAG:

"There has been a consistent confusion between the concepts of determining liability, which only a court can do, and drawing critical conclusions and making adverse comment on the basis of findings of fact, which Lord Penrose has consistently made clear that he can do and will do if justified by the evidence."

This same letter also quoted again a para from an earlier communication from the Penrose Inquiry (December 20th, 2002):

"He (Lord Penrose) has made clear that he will not shrink from making adverse comment about the conduct of individuals or institutions. Thus it is entirely possible that he will arrive at findings that are critical of specific parties.

That is quite different from determining breach of a legal duty or liability for any resulting loss, which could only be done by a court of law, following all the necessary adversarial processes and making a full assessment of damage for each claimant."

You will also be aware that it's now almost exactly two years ago that the 10th interim report by the Treasury Select Committee concluded:

"It is important that the role of regulator since 1993, when Equitable Life began to operate a policy of terminal bonus differentiation, should be analysed in order for the regulatory lessons to be properly learnt, for policyholders to fully understand the history of the affair and for Parliament to undertake its scrutiny of this topic
properly ..."

ONLY the PO has the real independence, the ability to compel civil servants to give evidence, the remit to focus exclusively on addressing liability/allocating blame, to publish its finding and to recommend that Government pay compensation if appropriate. The fact is that the P O will not have ANY access whatsoever to files or evidence obtained by Penrose and will not see the result before you or I so there is minimal advantage to be had through yet further delay.

Under these circumstance, more than two years since closure and in all probability seven more months before the Penrose Inquiry report, is published, it is extremely difficult to understand what possible explanation there can be for the Equitable Life's board's back-turning on the policyholder groups' plea - other than the politically obvious....

For the third time of asking, will the ELAS board please reconsider and join with "E 7" in asking the P O to immediately broaden her investigation to embrace possible maladministration by the regulators in the 1990s?

Yours sincerely,

Paul Braithwaite
General secretary, EMAG

Cc: "E 7", EMAG committee and website, Hugh Burns