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

Documents: 30/08/2002 - Update on the Penrose Inquiry

30th August 2002 - Update on the Penrose Inquiry

It is exactly one year since Sir Humphrey Appelby - er sorry - Junior Secretary to the Treasury, Ruth Kelly, announced the Penrose Inquiry.

A wonderful English device by "the establishment" to knock this scandal into deep field. And an amazingly effective device it has proved to be. Currently no less that four august bodies are sheltering inactively behind the Lord Penrose.

The Treasury Select Committee, under the ineffective new chairmanship of John McFall, is saying that they will not reconvene on Equitable until Lord Penrose reports. Similarly, the Parliamentary Ombudsman, who is examining only two sample cases of regulatory failure by the FSA between Jan 99 and Dec 2000, has said he will not broaden his studies until Penrose reports. The Treasury - they say nothing.

They claimed the report would be independent. This, despite them bearing the cost, providing the secretariat and determining when and exactly WHAT gets published. Given that the period of perhaps greatest interest in the regulation was 1998 and the fact that theTreasury has refused to divulge the briefing papers and minutes from that period, we cannot be confident that ANYTHING critical of the Treasury will see the light of day.

Our new Equitable Life board has also chosen, for reasons unknown, to hide behind this paper-thin wall: Under Vanni Treves the board has said that it cannot have a view about pursuing the regulators until Penrose reports.

Does all this seem like a cover-up and delaying tactics, or what?

Any documents that are available to Penrose are, in the main, available to the board now. Time is of the essence. We are being stalled for no good reason. Perhaps the hope is that we will lose the drive and that the media will lose interest. It's important that we, as EMAG, do NOT allow this to happen.

I have had an exchange with the Penrose Inquiry in the last few days which provides clarification on a number of important points. EMAG has made it clear that we will make a formal submission to the Inquiry and that is now in hand. It has also been agreed that EMAG will give formal witness evidence. You will see from the enclosed that the new chairman, of EMAG, Alex Henney, recently wrote to the board to encourage them to be proactive NOW in the pursuit of regulatory failure. The extracts from the civil servant at the Penrose Inquiry correspondence reproduced below (not marked "confidential") was received after Alex's letter to the board was despatched:


"The question of whether the Report should be published is clearly a matter for the Ministers, not for the Inquiry..Any decision to publish would need to be taken following a rigorous appraisal of all the confidentiality and public interest issues raised."

"Lord Penrose has been asked to look into the events leading up to the situation as at August 31st2001." Thus, explicitly excluding all aspects (and documentation) of the GAR/nonGAR compromise Section 425 agreement.

"Lord Penrose has not been asked to assess the current strategy or performance of the new board."

"As for compensation, you will be aware that it is not for Lord Penrose to determine matters of liability.Any decision to award compensation in the absence of a determination of liability would be a matter of public policy for the Government."

"We expect to commence taking witness statements shortly."

When the prime witnesses, 15 formed directors, have a £3 billion pound High Court damages action pending and the Inquiry is non-statutory i.e. voluntary, we cannot be confident that they will be forthcoming.

On the Penrose Inquiry's own website it makes it crystal-clear that it is NOT the Inquiry's intention to allocate blame. Merely, to describe the events of 50 years up to Aug 31st2001.

Our board saying it must wait on the Inquiry's findings is a delaying tactic and, we would suggest, a disingenuous sham. We cannot anticipate that the Treasury will allow into public domain ANY criticism of serial regulatory failure.

It is NOT in the Lord Penrose's remit to recommend compensation, other than in the broadest of terms.

It is therefore for the Equitable Life policyholders and EMAG to speak up NOW against any further cover-up and delaying tactics. Thus far, we the policyholders appear to have been stalled and thwarted by a cynical cover-up that seeks to obfuscate the Treasury's central role as culpable failed regulator. Until they accept that failure, how can savers have any confidence in pensions investments when the regulatory regime demonstrably does not work when stress-tested?

Paul Braithwaite
General secretary