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

Media Stories: 09/07/2008 - Telegraph leaks PO 2 finding of maladministration by regulators.

9th July '08 - Telegraph leaks PO 2 finding of maladministration by regulators.

Equitable: Campaign for Compensation begins

Equitable campaigners are calling on the Government for a £4bn fund to be distributed between the surviving 1.5 million investors who saw their savings slashed as a result of the collapse of what was once considered Britain's finest insurance company.

The battle to win compensation from the Government for regulatory failings will begin in earnest in the light of a damning report from the Parliamentary Ombudsman Ann Abraham.

The report which is due to be published next week will say that watchdog bodies were guilty of mal-administration and will point the finger of blame at the Treasury, Financial Services Authority and Government Actuary's Department.

The campaigners claim investors lost £4bn in three policy devaluations, which lopped 16 per cent off their savings in 2001, a further 4 per cent the following April and another 6 per cent in July 2002.

Others who decided to abandon the company, as it sunk further, were hit by punitive surrender values, specifically designed to stop them leaving and diluting the fund.

Equitable Member's Action Group spokesman Paul Braithwaite said:

"Typically our members lost 25 per cent of their investments. The Government has always resisted any compensation claims arguing that Equitable was the author of its own demise.

"Those of us who have been fighting for justice for eight long years, now feel vindicated, and we hope it is time for the Government to show some moral fibre."

However, even if the Government were minded to compensate victims, paying redress would be complicated. Different groups of policyholders were impacted in different ways.

Furthermore, only 275,000 policyholders remain with the society. More than a million either withdrew their cash, or had investments switched to another company. The with-profit annuitants went off to the Prudential and the non-profit business to Canada Life. What's more than 30,000 of the original investors have died, according to Emag, which is why it is calling for a fund to be set up immediately.

Emag has drawn up a plan for distributing this fund, based on everyone's policy value in 2001 when the company had £28 billion under management. Today its funds have shrunk to £7 billion. Under the plan, different groups would receive various percentage payouts depending on how badly their investments were hit.

Emag has established 20 regional cells and now plans to unleash a concentrated campaign to force the Government to fully compensate the victims, in the light of the Parliamentary Ombudsman's report.

This will involve lobbying MPs, and a timetable of events designed to push the Equitable victims up the political agenda.

Braithwaite added: "It has taken us eight years to get this far, and it is time these claims were addressed. Many of the victims are frail and elderly and some 30,000 have already died. We need a fund to be set up immediately."

For more details of your local cell see www.emagregional.org.uk

Among the groups with the strongest claims are;

1. Late-joiners

These are investors who were encouraged to join the society after September 1998 when Equitable's own legal advisers warned the company it could lose the court battle over guaranteed annuities. Despite this, new investors were reassured their money was safe, and given misleading information about the implication of the legal battle.

These investors suffered the same substantial cut in valuations, without ever enjoying any investment uplift.

2. Investors without guaranteed annuities

This group also has a strong case for redress, because when they invested members were never informed that another class of policyholders in the with-profit fund (those with guaranteed annuities) had a superior claim on the fund. This made their holdings significantly more risky

3. Guaranteed annuitants

These never received the guarantees they were promised

4. With-profit annuitants

These were initially told that their pensions would not be cut, but many subsequently saw their retirement income reduced by 40 per cent.

Teresa Hunter, Daily Telegraph
9th July 2008

Equitable Life victims could claim billions.

A damning report into the near-collapse of Equitable Life will highlight failings by government regulators and pave the way for billions of pounds in compensation to be paid out of the public purse. Ms Abraham's long-delayed report lays the blame at the door of the Treasury.

The parliamentary ombudsman, Ann Abraham, will announce in a report due to be published next week that watchdog bodies were guilty of maladministration ahead of the demise of the world's oldest insurance company.

More than a million customers lost up to 50 per cent of their pensions and savings when the firm was brought to its knees in 2000 in one of Britain's biggest financial scandals.

Equitable Life was forced to close its doors to new business after it admitted it had claimed customers' investments were worth £3 billion more than the company's total assets. As a result the insurer slashed the value of customers' policies.

Ms Abraham's long-delayed report, a draft copy of which has been seen by The Daily Telegraph, lays the blame at the door of the Treasury for failing to keep the insurer in check.

It could also rebuke the Financial Services Authority and the Government Actuary's Department. The report concludes that the Government's failure to regulate the firm correctly has led to injustice for policyholders.

Her report will lead to further questions about the regulatory regime set up by Gordon Brown during his time as chancellor. It has already been criticised over the failure to prevent the Northern Rock fiasco last year.

Equitable policyholders are almost certain to pursue the Government for compensation, which would leave the taxpayer with a bill for up to £4 billion, the amount the policyholders claim they have lost through regulatory negligence.

The Equitable Members Action Group (EMAG) has repeatedly maintained that "the case for compensation is overwhelming" and accused regulators of being "asleep at the wheel" when they should have been fully aware of the hole in the company's finances.

Its members are hoping that Ms Abraham will recommend that the Government compensates them for what EMAG describes as "the appalling failures by a succession of regulators".

Ros Altmann, a campaigner and former pensions adviser to the Government, said if Ms Abraham calls for compensation, the Government should respond immediately.

She added that having already used taxpayers' cash to keep the troubled mortgage lender Northern Rock afloat, it would come under even greater pressure to allocate money for Equitable Life policyholders.

Ms Abraham has spent four years looking into the demise of Equitable Life and allegations that public bodies responsible for regulating the life assurer failed "to exercise their regulatory functions" properly.

Her report has been delayed three times for a string of reasons - including having to incorporate "substantial representations" from the government bodies whose actions are subject to investigation.

The findings were initially due to be published by the end of 2005.

EMAG has set up a network of regional action groups in cities including Birmingham, Bristol, Cardiff, Manchester, Leeds, Norwich, Plymouth, and Edinburgh in anticipation that the report could also recommend compensation.

Equitable Life, which is currently running an auction to sell its remaining £7 ?billion of assets, has been pushing for the report from the Parliamentary Ombudsman.

Should it recommend compensation, it is likely that Equitable Life, which was founded in 1762, will call for urgent payments, as many of its policyholders have died, and those that are still alive are in their seventies.

Many reports have been published into the firm's collapse. In 2004, Lord Penrose's report criticised the way the society was regulated by the Government, but said this was not the cause of Equitable Life's distress.

He said a management culture of "concealment" and "manipulation" as well as over-reliance on its actuaries were to blame.”

Yvette Essen and Gordon Rayner, Daily Telegraph 9th July, 2008

“Ann Abraham's report into Equitable Life shows the buck stops with the Government.

Ann Abraham's report into the collapse of Equitable makes damning reading. The conclusions, seen by The Daily Telegraph, will leave readers in no doubt next week, on official publication, that the buck must stop with the Government.

Labour's filibustering when it comes to accepting the Government's share of the blame has heaped scandal on scandal for the million or so Equitable savers who have been left in reduced circumstances.

Many of these are elderly people who have been left to eke out their remaining years in penury. Having stood behind the savers of Northern Rock, the Government has set itself an onerous precedent.

Nationalisation was never the best route to take but, having failed to deliver a market solution for the lender, the Government must now live with the full implications of its actions. The Treasury can't bail out one set of savers and not another - both left high and dry by the same combination of failings.

Of course the billions that the Government now faces in compensating Equitable policyholders could not have come at a worse time.

Politically, it will highlight yet more failings by the Government in the world of finance and the public purse can ill afford yet another claim on it thanks to officialdom's mistakes.

We, and most importantly Equitable policyholders, have waited years for the publication of Abraham's report. Alistair Darling and Gordon Brown cannot simply try to kick this issue into the long grass again.

Maladministration by the Government contributed to Equitable's collapse and so, unfortunately for taxpayers, the Government should rightly pay compensation. But it must be paid quickly and without further delay for the sake of all those long-suffering Equitable victims who have waited years for justice.”

Damian Reece, Daily Telegraph 9th July, 2008