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: 28/02/2005 - EMAG's chairman, Tom Lake to the PO 2 Investigative team leader, Iain Ogilvie, 28 Feb 2005

Iain Ogilvie Esq
The Equitable Life Investigation
Office of the Parliamentary Ombudsman
Millbank Tower
London SQ1P 4OP
Equitable Members' Action Group (EMAG)
59, Alexandra Road
Reading, RG1 5PG

28 February, 2005

Dear Iain,

With some satisfaction at having reached this point, even if several years after the events evaluated, I am attaching EMAG's evidence, organised according to the formal heads of complaint and with accompanying papers for examination by your Investigation team.

Although many hundreds of thousands of pages have been written about this affair, it can be seen at heart to be a simple one. Equitable simply couldn't support the obligations it took on, the regulators simply didn't stop it, although they ought to have done, and they let the policyholders and public remain in ignorance of the true situation, which they shouldn't have done!

With your Investigation's power to compel evidence, we believe that the complexity can now finally be unraveled with new clarity.

One of the motivations which has fortified policyholders in seeking redress is simple outrage. I hope you could agree that outrage can play a constructive part in social evolution by motivating reform. EMAG believes that your Investigation will have important consequences for future regulation in our country. Financial loss drives many to persist for years in their claims. If these two motivations are not identified and redressed for present and past policyholders, it will be the case that the sincerity of reform would be treated with rightful resentment. EMAG recognises the two-step process: findings on maladministration followed by quantum on damages, if warranted.

In our main submission we have tried to point to the evidence, sometimes directly but often indirectly, using the many reports already available, and to articulate as best we are able, the deductive arguments which support the policyholders' claim.

EMAG's supporting papers give the background and show the evolution of our thinking, with growing confidence apparent as matters came to light. They give extensive detailed evidence and commentary and are referred to extensively in the main submission.

Several public bodies have been implicated in this scandal. At the time of greatest damage the Department of Trade and Industry had the main responsibility. But in recent years, and at the time when these matters came to public attention and the prominence, the Treasury itself was responsible for prudential regulation. Given the contracting out of some functions to the FSA, and the retention of others, your team will have to weigh the arguments as to the extent to which the Treasury retained supervisory responsibility during this period. Contrary to E C Directives, the grey area of C o B, whereby The Treasury contracted out to a series of supposedly self-policing non-Governmental bodies, is particularly problematic.

On some issues our attempts to obtain evidence are still in progress. We would seek permission to reserve the right to bring further evidence forward. However, in general, it will not be for lack of evidence that policyholders' claims could fail!

In order to get this material to you promptly I am forwarding the main submission with this letter electronically, and have merely provided the internet URLs for the accompanying papers. We will follow this up ina few days with a CD-ROM containing all of this material. A small number of papers referred to are not available electronically and these will be forwarded by post. The list of accompanying papers with URLs where applicable is appended to this letter.

A much appreciated beacon in this affair lies in the actions of MPs and the Ombudsman in finally bringing about the far-reaching Investigation that you now lead. We wish you the fortitude to carry it through and we offer you whatever further assistance as is in our power. Just ask!

Yours sincerely,

Tom Lake
Chairman of EMAG
Email: tom.lake@glossa.co.uk
Tel: 0118.956.1919

List of accompanying papers

The appendices of the submission refer to certain of these papers as follows:

Appendix B Paper 12
Appendix C Paper 2
Appendix E Paper 13
Appendix F Paper 11
  1. Report to Gordon Brown, (gives EMAG's proposals on compensation for losses caused by the default of prudential regulators), EMAG, 30 Nov 2003

  2. Equitable Life - With Profit Fund, Burgess Hodgson for EMAG, 26 March 2003

    financial analysis

    We add 2 new pages to this giving a revision of figures using additional inputs from Lord Penrose's report.

  3. The Burgess Hodgson Addendum to Forensic Accounting Analysis of Equitable Life, Burgess Hodgson for EMAG, 25 June 2003

  4. Memorandum on Equitable Life, Cazalet Financial Consulting, evidence to the Treasury Select Committee, 2001, available as Appendix 5 to their report.

  5. An assessment of the adequacy and objectivity of the information provided by the board of the Equitable Life Assurance Society in connection with the compromise scheme proposal of 6 December 2001, Prof David Blake, then of The Pensions Institute, Birkbeck College, for EMAG 19 December 2001

  6. Out of the GAR frying pan into the GIR fire, Prof David Blake, Pensions Institute, Birkbeck College, for EMAG, 10 May 2002

  7. EMAG's evidence to the Penrose enquiry, 27 March 2003

  8. EMAG's petition to the EU Parliament's Petitions Committee, 7 December 2004

  9. Letter from EMAG to FOS, 21 December 2004

  10. EMAG's submission to the PO's consultation, 18 May 2004

  11. Burgess Hodgson report on ELAS Fact Sheet, 12 January, 2005

  12. Leaflet published by Equitable February 2000 (i.e. immediately after the Court of Appeal judgment) entitled '1999 Investment Returns'.

  13. Leaflet published by Equitable in March 1998 entitled "RETIREMENT INCOME - With-Profits Pension Annuities"