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: 20/03/2002 - to John Tiner, FSA
38 Swains Lane
N6 6QR

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

20th March, 2002.

Dear John,

Improving the governance of mutuals

I write as a follow up to the three letters which I sent you dated 17th, 25th and 28th January and to the meeting that Paul Braithwaite and I had with you on 11th February. Since sending you the letters I noted on Motley Fool that Ronnie Sloan, actuary and independent board candidate at Standard Life has for the second year running withdrawn his application in protest of the proposed voting procedure despite his seemingly suitable qualification. To paraphrase from his press release the obstacles to his election are that:-

  • it would be necessary first to vote off one of the existing directors standing for re-election

  • the chairman would not agree to abstain from casting all discretionary proxies in favour of existing directors (thereby thwarting the above), nor from casting them against Sloan if his resolution ever came to a vote

To these ends we would like to see ACTION by the FSA to improve the governance of mutual life offices. We want to see the following provisions set out in legally enforceable form:-

  • analogous to the Building Societies Act of 1986 we want a definition of the maximum number of members required to call an EGM of (say) 0.1%, and to put a motion to an AGM of 0.05%

  • a minimum number for proposing people for election to the board. The number would vary by size of membership, but might be 50 for a Society the size of Equitable. There are two reasons for this:-

* to avoid frivolous applications

* to avoid the incumbent Board splitting "independents'" votes

  • a ban on voting by resolution, which requires members to vote for and against each resolution and allows proxy voting. Indeed if a voting paper is signed, but the votes are left blank, the voter is deemed to give the chairman power of proxy. The Building Societies Act 1986 allows for both voting by resolution and postal voting, which the Nationwide adopts. Under postal voting the yes votes for each candidate are totalled and those with the most votes are appointed. There is no proxy voting and signed blank forms are void)

  • the publication on a website of all matters of significant commercial interest unless those matters are adjudged to be genuinely commercially confidential in the interests of the members. Where there is a dispute between members and a board over whether a matter is confidential or not, there should be a simple means of resolving the dispute on a level playing field which precludes the board employing a squad of lawyers and barristers to outspend members. The means might be a reference to the FSA or a county court with provision for no award of expenses

As I mentioned to you before, the members of Equitable have seemingly got nothing from the regulatory authorities so far - time for a change?

I have written in a similar vein to Howard Davies.

Yours sincerely


c.c. EMAG Committee and EMAG website.