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: 19/03/2004 - EMAG's letter to MPs, briefing in advance of debate.

19 March '04 - EMAG to MPs

House of Commons
London SW1A 0AA
42 Bartholomew Villas
Kentish Town
London NW5 2LL

19th March 2004


The forthcoming Equitable Life debate on Wednesday afternoon 24th March

One of our EMAG members wrote this week:

"It doesn't help the policyholders one jot for politicians to argue the toss about which party's regulatory system was around at the various times - they ALL FAILED THE POLICYHOLDERS, and this is not an issue of party politics, it is about restoring the electorate's faith in the morality of government, the meaning of regulation, and confidence in the financial services industry."

On March 8th Ruth Kelly presented the 818 page tome that is the Penrose Inquiry report to the House, but in a highly selective fashion. In her speech she repeatedly blamed "light touch" regulation and the sins of the Tories. In half a million words the report makes one glancing reference to the term on page 538! Lord Penrose's speech in Edinburgh on Thursday is reported thus:

"On political spin that the disaster was because of "light touch" regulation, Penrose said: "I don't actually know what it means. Sometimes one gets the impression it is so light it has missed the surface altogether. It was reflected in inadequate numbers of regulators, advised by inadequate numbers of specialists in the GAD applying a limited form of scrutiny."

With similar sophistry, Ruth Kelly has repeatedly alluded to Lord P making no finding of maladministration nor recommendation for compensation, which he made clear subsequently to the select committee that he did not consider as being his prerogative. There has been an enormous outcry in most responsible newspapers at the bias displayed in the Treasury's presentation.

The fact is that Gordon Brown (who has never uttered one word about Equitable Life) and his Treasury team have known about the parlous state of Equitable Life since 1998 and have consistently swept the scandal under the carpet and, shamefully, still continues so to do. This is doing untold harm.

George Mudie in the Treasury select committee on Tuesday said to Ruth Kelly:

"...the person who has done what the government wants them to do and the Penrose report says, we are in the clear, you are on your own brothers and sister. Its strike me as being callous - understandable with three billion - and something must shake people's confidence to say, "why should I bother?".

On EMAG's behalf I wrote to you on January 29th to suggest that the right person to take this forward and address the issue of possible compensation is Lord Penrose. He alone enjoys the confidence of both the Treasury and the policyholders, who accept his report as even-handed. After two and a half years looking at Equitable (just one year less than myself!) he certainly has the benefit of a unique understanding. His report, in addition to providing a plethora of evidence of regulatory negligence, contains many comments which conflict with much of the Parliamentary Ombudsman's (PO) existing report, which EMAG has made the subject of a current claim for a judicial review to overturn her exoneration of the FSA. If, notwithstanding, it is the will of Parliament that the PO looks again, then the errors of law that EMAG maintains have been made in her first report must first be corrected and, at minimum, her remit has to be expanded to embrace both conduct of business regulation and the GAD.

I write to ask you to, please, read Penrose's chapter 19 (the edifying conclusions of his report) and attend and participate in the debate which will be of concern to many of your constituents. Also, to either sign EDM 827 if you are a Labour MP or EDM 788 if opposition. They amount to the same thing: asking either Lord Penrose or the PO to address maladministration and compensation.

The Treasury's disposition is clear, but incredible and callous:

"Go sue yourselves. And when it's bust, the industry can pick up the tab."

We do not believe that this is acceptable. When it comes to pensions built up over 40 years the issues transcend parties and the responsibility is for whichever government is in power when the problem comes to light. Lord Penrose made it crystal clear last Wednesday that he regards it as being for Parliament to determine the way forward. Please play an active part in redressing this obvious injustice which has gone on for far too long.

Yours sincerely,

Paul Braithwaite
General secretary of EMAG
For further information, see: www.emag.org.uk
Tel: 020.7267.5938

PS: EMAG submitted a four page briefing paper on Penrose for the Treasury select committee. Additionally, EMAG has prepared a paper contrasting the PO's report with Penrose's findings. Both are available on request.