“Equitable Life: 'Nine out of 10 victims will get nothing from the Government'.

Sunday Telegraph 15th February, 2009
by Paul Braithwaite of EMAG

Members are 'outraged by the Prime Minister's hypocrisy', says the head of the Equitable action group.

Despite belated and begrudging government promises of compensation, long-suffering policyholders with failed insurer Equitable Life should be prepared for disappointment.

The Equitable Members' Action Group (EMAG) believes that nine out of 10 Equitable Life victims will be excluded from the carefully crafted "hardship" scheme proposed by Yvette Cooper, the Chief Secretary to the Treasury.

EMAG has been fighting for more than eight years for justice and compensation for the repeated failure of the financial regulators. I'm sad to say that the scales have fallen from our eyes as we've witnessed the tactics to which the Mandarins in the Treasury have sunk, over and over, to delay and deny us justice.

Investors in Equitable Life, where the hopelessness of financial regulators surfaced first in 2001, have suffered every single shabby trick in the book at Sir Humphrey's hand.

You might have expected, when Parliament's own Ombudsman, Ann Abraham, presented her damning report in mid-July last year, a searing indictment of maladministration and injustice by regulators for more than a decade, that the compensation she recommended would follow swiftly from the tribunal she proposed.

This was game and set but, sadly, not match to EMAG and the complainants. Unfortunately, the Treasury saw things differently.

In Parliament on January 15, Ms Cooper gave the appearance of delivering a fulsome apology. She implied acceptance of the Parliamentary Ombudsman's report and announced the appointment of a retired senior judge, Sir John Chadwick. What she didn't reveal was the devil in the detail in the command paper – released hours later – which was totally at odds with the tone of her statement.

The "ex gratia" payment scheme and the Treasury's instructions to the retired judge were all restricted to only the few Ombudsman findings which the Government chose to accept. It's hard to credit the brass-neck sophistry she perpetrated and it's not just the victims that were duped, it's our MPs too.

Incredibly, most have yet to realise that we've all been "had" yet again, with no prospect of any payments this side of an election and many more victims dying waiting, which flags up the likelihood that the Equitable scandal can and will become a vote-influencing electoral issue.

The Treasury has rejected, with scant explanation as to why, three out of four of the big issues that warrant proper compensation. The Ombudsman put the start date for injustice as July 1 1991, when the Equitable's 1990 regulatory return was filed. In doing so she included as potentially eligible for compensation all of the million-plus savers who entrusted their money, mostly pension money, to Equitable Life after that date.

But the Treasury has totally ruled out these three big-money findings, leaving just one admitted injustice perpetrated in 1999. This relates to the Financial Services Authority knowingly allowing a worthless so-called "reinsurance contract" to be valued – in order to keep Equitable nominally solvent – as a real asset valued at £800m.

It is this movement of start date by eight years out of the possible 10 that would exclude most policyholders from receiving any compensation. EMAG's accountants, Burgess Hodgson, have done the sums and reckon that this reduces the eligible losses for compensation by 90pc.

The Treasury's proposal is to make ex-gratia payments (not compensation) to individuals who have suffered "disproportionate effect" and can demonstrate their dependence on income from their Equitable policy. Sir John will advise on this. The process looks like an attempt to give a veneer of judicial respectability to a cheapskate hardship scheme.

EMAG recently made the case for Sir John's appointment to be set aside in favour of the original independent tribunal process proposed by the Ombudsman, which would dispense fair compensation – not cut-price charity.

Amazingly, after eight years' struggle, EMAG has 21,000 paid-up members and has never been stronger. This is because of deep-felt outrage at the hypocrisy of such humbug as "Fairness is in our DNA" – a claim made by our Prime Minister. Those who've lost out simply can't understand why depositors with banks such as Royal Bank of Scotland and Icesave have been fully protected, yet Equitable's pensioners are left to swing.

It seems that we, the victims, will have to intensify our political fight for justice.

We have been greatly helped by the crusading support of The Telegraph. What sufferers can do is to contact their MP, asking him or her to stand up for their own Ombudsman and to say no to the fudged process proposed. They should also get involved with their local EMAG regional group via www.emagregional.org.uk.