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: 20/11/2002 - E 7, all action group, letter (Nov 4th) to Parliamentary Ombudsman

20 November '02 - E 7, all action group, letter (Nov 4th) to Parliamentary Ombudsman

Ms Ann Abraham
The Parliamentary Ombudsman
Millbank Tower
London SW1P 4QP
42 Bartholomew Villas
Kentish Town
London NW5 2LL

4th November, 2002

Dear Ms Abraham,

Plea from Equitable Life policyholders groups - E 7

On this your first day as Parliamentary Ombudsman, on behalf of Equitable Life policyholders, may we wish you success in your important-to-democracy new job.

One of the hottest potatoes you inherit is ours!

As you will know, the Equitable Life closed its door almost two years ago and the million policyholders then on board could be forgiven for believing the ship was holed below the waterline and has been sinking ever since, with ever-worsening news and no visible signs of help.

Your office has an astonishing 253 referrals on Equitable Life from MPs of every party alleging maladministration. Many of these stretch back through the 1990s, some beyond.

The E 7 group of groups* was recently formed because of our unanimous conviction that there has been serial regulatory failure, as flagged in the Treasury Select Committee report of March 2001. Ron Baird's report into the FSA's role (published in October 2001) was both helpful and critical. In its wake, Sir Michael Buckley decided, as a preliminary, to investigate a sample case from the short period covered by Baird. We are told that the report is not near completion.

E 7 believes that there is a pressing need for an immediate independent, comprehensive study of the possible maladministration by the regulators of the Equitable Life.

In particular E 7 seeks an investigation into the period before 1999, which the Treasury seems so desperate to keep out of the spotlight. To this end we gathered outside Parliament last Tuesday Oct 29th with fifteen sympathetic MPs drawn from all opposition parties and with the active support of the Consumers' Association. We marked the occasion with a cake addressed to you emblazoned with words:

"Parliamentary Ombudsman, please HELP!"

It was demoralising for us to learn that before we had even departed from Westminster, the office of the P.O. had put out a press release summarily rejecting our request. This seemed unreasonably pre-emptory, given your imminent arrival.

Whilst we agree with its declaration that:

"……the root cause of the problem - the failure of the authorities to establish at the outset a single inquiry with terms of reference covering all aspects of the Equitable Life affair"

we believe that the following was disingenuous:

"…plainly inefficient, and potentially unfair, to have two simultaneous but separate investigations covering much the same ground."

Many committee members from our diverse policyholders groups have met with Lord Penrose, some of us more than once. We understand very well the all-encompassing breadth of his remit. He is looking at the broadest of canvases over a 50 year period, embracing Equitable Life, the industry, the succession of regulators, and the Inland Revenue. He has said that he will not seek to allocate blame but rather to describe the circumstances that led to the Society's parlous state in the summer of 2001.

What E 7 is calling for would certainly not, therefore, "cover much the same ground". We are asking you for a focussed study of possible maladministration through the 1990s (and to date), explicitly with a view to addressing blame and proposing Government compensation, if appropriate. This is not within Lord Penrose's brief.

The plain fact is that the Penrose Inquiry is the Treasury's. It is not truly independent. It is staffed by Treasury civil servants on secondment and it reports ONLY to Treasury ministers, who will have the prerogative to protect their own with by blue-pencilling anything they please (claiming confidentiality and sensitivity) or, in extremis, to refuse publication - even to MPs.

Committee members last met with Lord Penrose on Wednesday 30th October and at that time he said: "I hope to have completed my report by the end of next year." But he added that a large number of people wish to make witness statements, that the drafting will be a very big job and that Maxwellisation will inevitably delay his report. We were also told that your office does not have any privileged access to that Inquiry's papers or documents supplied to it in confidence.

A million policyholders believe that regulators have failed them. In consequence there is a crisis in confidence and an unprecedented degree of mistrust. Would refusing to start a comprehensive study for yet another year really be better than turning a new leaf and instigating one immediately? Is it right to allow the Treasury to get away with its obvious delaying tactics to the frustration of so many MPs? A proportion of Equitable's pensioner policyholders are dying with every passing year. Justice delayed is justice denied.

We enclose the comprehensive press release that we circulated last week, containing a fuller exposition.

In conclusion, on behalf of the beleaguered policyholders of Equitable Life, can we simply say to you today, please, HELP?

Yours sincerely,

Paul Braithwaite
Spokesman for E 7, the policyholders' group of groups

* E 7 is a new federation of independent action groups comprising: Internationals, Annuitants, Income Drawdowns, Late-joiners ELJAG, ELMHG, EMAG and EPHAG.