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: 17/01/2002 - to John Tiner, FSA re Halifax deal
38 Swains Lane
N6 6QR

17th January, 2002.

Mr. John Tiner
Managing Director
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
T: 020 7676 1000
F: 020 7676 0030


Dear Mr. Tiner,

The ELAS/Halifax deal

I write on behalf of the Committee of EMAG.

On February 9 2001 members of EMAG (and EPHAG) met with Mr. James Crosby, Chief Executive of the Halifax (now HBOS) and with Mr. Headdon, formerly the Chief Executive of ELAS. This meeting followed the deal whereby Halifax took over various operations of ELAS.

It seemed to the members of the EMAG Committee attending the meeting that we had a right to be provided with figures that would enable us to judge the deal, and furthermore a right to figures about the additional future costs we would incur for Clerical & Medical to manage our funds going forward. To this end I prepared a letter which was tabled, see attached. After the meeting Mr. Crosby mentioned to Mr. Vincent Nolan, then chairman of EMAG, that he thought we were entitled to the figures.

In the event Halifax agreed that ELAS could put on its website a letter dated 28 January 2001 setting out the principal terms on which Halifax was prepared to negotiate, but it did not provide any quantified answers to our questions1. Subsequently I raised the matter with Mr. Treves, and he agreed we should have the figures but he would need to get clearance from the Halifax. In a letter dated 8 August I wrote to him wondering how the matter was progressing. He responded on 9 August saying that "We asked the Halifax for their consent to make the full agreements with them available to anybody who wanted to see them as long ago as 8 June. We have reminded them as recently as a few days ago, but have not yet heard. As soon as we do, I will let you know". On 4 September I wrote to Mr. Crosby raising the matter and enclosing my letter of 9 February. I did not have the courtesy of a reply, so I wrote again on 20 September, and the following day was told that Mr. Abercrombie, the Chief Executive of Clerical & Medical was dealing with it. After several weeks, I still had no reply so I telephoned Mr. Abercrombie and after several calls we talked. Mr. Abercrombie commented that there was material in the agreement that was commercially confidential to the Halifax. I stressed we wanted the information that related to our concerns which we could not imagine was confidential to Halifax. In due course I received a letter from Mr. Baines which is corporate blather, see attached. Mr. Nolan wrote again to Mr. Crosby and received an unsatisfactory reply (see attached). Mr. Crosby's word does not seem to be his bond.

This episode is yet another example of the whole miserable experience of Equitable, and is sadly representative of the obscurantist, secretive, and self serving traditions of the personal financial services industry. When I talked with your colleague Michael Foot in September he expressed surprise that we had not been provided with details of the Halifax deal, and (to broaden the issue) also that we had not been provided with information about the review that led to the 16% reduction in policy values on 16 July. Subsequently as Professor Blake observed in his report for EMAG, the members were not provided with up-to-date financial information for taking their decision on the compromise nor with other relevant information (see attached).

Your recent paper "Disclosure to Consumers", which is part of your review of the With-Profits industry, refers to better information on "How the investment is progressing after it has been bought". Your paper is obviously addressed to the provision of information under routine situations, and is not dealing with the issue of information for the owners of mutuals still less for the exceptional circumstances of the Equitable. Nonetheless I would have thought that information about the Halifax deal; about the review; and up to date information on the state of the fund for purposes of making an informal vote on the compromise was by extension the type of information which you would agree we should have. I get monthly information on the state of my investment in an unregulated offshore fund and can pick up the phone and talk about what is going on. Should it be so difficult for the owners to get information about their investments in the Equitable regulated by the FSA?

I am not aware of any help which the FSA and the predecessor regulatory authorities have been to the members of Equitable. Thus far Mr. Treves' claim "This is our Society and members are entitled to know everything about how it is run unless open disclosure would be commercially damaging" and Mr. Thomson's wish "to run the Society in a more open and accountable manner" have been empty public relations verbiage. I hope you intend to do something about the general issue of obtaining information on investments and also the need to develop meaningful mutuality, and in particular will help on these issues - for once let us, the members of Equitable, see something for the money we spend on the FSA.

I copy this letter to Mr. Sandler and Mr. Mick McAtteer, the EMAG website and several journalists.

Yours sincerely,


c.c. Mr. Vanni Treves
Mr. Charles Thomson
ELAS non-executive member:
Mr. James Crosby

1I note in your letter to Mr. Paul Braithwaite, Chairman of EMAG, you stated that "I understand that the key terms of the agreement with Halifax were published by the Society earlier in the year". If you review the material that was put on the website you will find that your statement was incorrect. The only numbers were the management charges by asset class, and there was no reference in the document that payment of £250m was contingent upon the compromise being agreed by 1/3/2002. (I have recently written to Mr. Thomson asking after the origin of this provision, to which he did not allude in his report of 11/4/01 included in the Equitable's Annual Report and Accounts for 2000). We wonder what else is lurking in the final agreement that might be revealed as an unpleasant surprise in the future.