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


News - 2005

  • 20/12/2005 - SFA from SFO

    The SFO has taken nearly two years of inaction to decide not to investigate the Equitable, despite extensive prima facie evidence of deception in the Penrose Report. In the opinion of EMAG’s chairman, Tom Lake, this is a further nail in the coffin of the SFO and NOT a statement of the truth of the matter. Read the SFO’s official release here.

    From Ruth Sunderland in the Daily Mail 20 December:
    “Paul Braithwaite of EMAG said: 'The SFO's unexpected decision not to investigate looks ominously like the Establishment clearing the decks to rubber-stamp Vanni Treves' proposal to break up Equitable at any price.’"

    Also see:
    Daily Telegraph: Paul Weir, spokesman for the Equitable Late Contributors Action Group, said: "It looks to me as though the Penrose report has been parked in the library for two years while they sat on their hands!"


  • 16/12/2005 - Academic study of the FSA?

    In the past six months EMAG has approached a dozen leading instititutions and academics to seek an impeccable independent evaluation of the FOS’s treatment of ELAS Complainst. Frustratingly, thus far we have failed to make an appointment.
    EMAG's current approach is to seek a recently retired Law professor latest thought is to look for a Scandinavian academic, with their stronger heritage of objective evaluation of ombudsmen. The news on the EU Committee of Inquiry elevates the importance of this study.

  • 16/12/2005 - The FSA, ELAS and EMAG

    In late November the board of EMAG became profoundly concerned about planted rumours of sell-offs and the overall stewardship of ELAS. This was before the devastating legal climb down that cost policyholders dear (£45m plus). Read EMAG’s letter to the FSA.

    A two-hour meeting took place on 14 December at the FSA’s office in Canary Wharf. Six of EMAG’s directors met the FSA ELAS supervisory team, headed by Ian Tower. The meeting was on the record and minutes will be published, after they have been checked for factual accuracy.

  • 09/12/2005 - Someone’s got it in for Thomson

    On 4 December, Jeff Prestridge wrote a vitriolic piece attacking ELAS’s chief executive Charles Thomson, for being a part-timer.

    The following Sunday Jeff Prestridge, for whatever, twisted the knife on Charles Thomson, telling Treves in no uncertain terms to sack him. But the architect and strategist is, in EMAG's opinion, the chairman.

    See Prestridge's article.

  • 09/12/2005 - A spate of letters

    The FT’s coverage on 3 December provoked the Equitable’s deputy chairman, Peter Smith, into complaining about one-sided reporting.

    In their turn the Smith letter and Whittam-Smith’s comment piece drew letters from two of the defendants, Peter Davis, to the FT about Peter Smith’s letter and Chris Headdon about the Whittam-Smith piece.

  • 29/11/2005 - “Friday night Specials.”

    In America, a “Saturday Night Special” is a handgun illicitly obtained for muggings etc. ELAS policyholders seem to be the subject of a cruel new game: The Friday Night Special. It’s been being played for the last month, succoring media and members alike.

    There have been a series of scoop press stories that have been leaked to journalists, subsequently to be denied by the Society.

    1. It was reported that the Society will settle with the nine remaining defendants and bear all their legal bills as well as the Society’s own. Just the EXTRA is estimated at in excess of £10m, taking the cost of what looks increasingly like fruitless Court cases nearer to £50m total than the £30m thus far admitted by the Society. Jeff Prestridge was the favoured journalist, on 6 November

    Notwithstanding, the lawyers have continued for weeks with the meters running to prepare their final skeleton legal submissions prior to returning to Court on 12 December. IF the rumours are accurate, then ALL of these legal costs for both sides since September may fall against the policyholders in ELAS.

    2. The following week (13 November) the PRU was tipped, once again by Jeff Prestridge in the Mail on Sunday, to be taking over the preponderance of the Society’s annuities.

    On 14 November the Manchester Evening News ran an hilarious ambiguous headline: “Pru's scorcher of a deal for Equitable!” If it’s a cracking deal you can be sure the beneficiaries will be the PRU’s shareholders and not ELAS’s members. The term “sale” may prove to be a misnomer: The sum of £200m has been quoted and this may turn out to be in the form of a dowry to take contracts off ELAS’s books. See also: Lucy Warwick-Ching in the Financial Times (14 November)

    3. On 19 November the Daily Telegraph’s oft-favoured-by-the-Society journalist, James Moore, reported that break-up expert consultants Lexicon Partners are to be appointed. Read here.

    4.Of late, the leak machine has been in overdrive with a series of rumours of who will compete with the PRU. Names including Goldman Sachs, reported by Christine Seib in The Times (25 November)
    Swiss Re, see The Times 27 November
    Another summary piece by Mail on Sunday’s Jeff Prestridge (27 November) fed the rumours of a competitive feeding frenzy. This added Royal London to the list that already, apparently includes the PRU, Hugh Osmond, Resolution and Canada Life.

    5.But by 28 November denial stories have begun to appear: Swiss Re: Reuters

    Followed swiftly by Royal London: Reuters 28 November

    EMAG deplores this pattern of leaks and denials and is loath to act as a cipher of dissemination in what is a cynical game against journalists and policyholders alike. “News Management” for Equitable Life appears to have hit a new low.

  • 02/11/2005 - Case against Roy Ranson DROPPED

    The Court cases continue to unravel like an Agatha Christie melodrama – and then there were nine. The majority of policyholders, and Lord Penrose, hold Roy Ranson responsible as progenitor to the Society’s downfall. As such, it is almost incomprehensible that the board, which had held out the prospect of billions being recovered from the parties it held responsible, like Mr Ransom and Ernst & Young, should so ignominiously drop all claims against them. We now have a situation where clearly the board’s heart is no longer in the pursuit of nine remaining directors, all of whom, with the exception of Chris Headdon, were non-exec minor players. This astonishing news was sneaked out, like a thief in the night, late on Friday 28 October but it was covered in the papers on Saturday 29 October:

  • 24/10/2005 - Court actions unravel

    The shock of dropping by ELAS of the “lost sale” claim on 17 October of the £1bn against the remaining directors leaves the claim at £641m against nine former non-execs and one exec director. At best, it would be surprising if as much as £20m compensation could possibly flow to the WP fund. This, from claims that started out more than three years ago at £6,000,000,000 - which is why EMAG dubbed the disastrous duo of Treves and Thomson as dream-peddlers.

    Given that the majority of the claims how now been dropped, the remaining 10 defendants are legally entitled to be re-imbursed for ALL their costs associated with the dropped claims. It is quite possible that further settlements will be reached that are billed as being ostensibly on terms whereby each sides bears their own costs, though that could still conceal seven figure payments towards the defendants legal fees against dropped claims. The REAL loss to policyholders is for the billions of compensation held out as likely to flow from the aborted claims.

    Once again, the press coverage was dire:

    The Lawyer reported: “Chief executive Charles Thomson said the decision had been taken to “speed up the process and reduce overall costs”. HOW UTTERLY LUDICROUS!

    Jeff Prestridge in the Mail on Sunday - “Equitable should wave the white flag”

    The Herald


  • 24/10/2005 - ELAS appoints No 10’s favourite PR outfit

    The Times broke the news on 21 October that the Eqitable’s in-house PR, Tony McGarahan is leaving and has been replaced by consultants Finsbury PR, who are rumoured to be “very close” to No 10, Downing Street.

    This is how Christine Seib of The Times described the appointment:

    ”EQUITABLE LIFE has hired a leading City public relations firm to sell its revised business strategy to disenchanted policyholders in the hope that a successful new direction will repair the mutual’s image after its £3.7 billion legal debacle……… The appointment came after Tony McGarahan, PR adviser to the Equitable board for the past three years, said that he wanted to leave once the substantial part of its court action was finished.”

    NOT something to be proud of, given the outcome and the truly ghastly press the case has garnered since its ill-fated start in mid-April!

    Click here for more information.

    The Scotsman reported:
    “In what the Equitable Members Action Group (EMAG) billed as "Another fine mess", the appointment of No 10's favourite PR outfit - one of the most expensive in the City - was met with utter dismay.
    Gone is internal press officer Tony McGarahan and in comes Finsbury PR. Why, asks EMAG, does Equitable need to appoint costly PR consultants that policyholders can ill-afford?
    "The last time this happened was to peddle the dreams now referred to as the CONpromise," rages secretary Paul Braithwaite.”
    Click here to read more.

    See how Finsbury PR’s predessors Burson-Marstellar described how they masterminded the CONpromise in 2001 and be concerned!

  • 07/10/2005 - 3 August: EMAG’s AGM and EGM

    On 3 August EMAG held its fifth AGM. Since EMAG incorporated in June 2005, that meeting was followed by an EGM of EMAG Limited

  • 07/10/2005 - Court: case against two directors dropped

    On 3 October, as Court resumed temporarily, it was announced that two of the directors had agreed a “drop hands” deal, with each side bearing their own costs. In the cases of ex-marketing director Shaun Kinnis and ex deputy president Peter Martin, their legal expenses were modest.

    Further, it was announced that another claim, that against Chis Headdon as Reporting Actuary has also been dropped.

    In principle, substantial cost payments MUST now be made by the Society to the 13 remaining directors still being pursued for £1,700,000,000 for the work and evidence prepared in the claims already dropped.

    The Court hearing on 3 October (day 60) concerned an unsuccessful action by the two solicitor firms on Conditional Fee Arrangements (CFAs) to seek an interim payment reimbursing their expenses. Langley J. agreed with the Society’s silk, Iain Milligan QC, that now was not the time to do the calculation.

    There is widespread speculation that the Society wishes to end the remaining action but this will not happen without a very large cost to ELAS towards the remaining 13 directors legal costs. The case continues on 10 October when the Society’s “expert” actuarial witness, Mike Arnold, will be cross-examined by Sher QC, Rabinowitz QC and Chris Headdon. Arnold’s testimony has been “redacted” from 360 pages to less than 100 because of the dropped claims.

  • 07/10/2005 - ELAS’s interim accounts

    The half-year accounts to 30 June were published on 29 September and are available to download from the ELAS website here.

    The fact remains that the Society is locked in to maintaining just 5% in equities, so it has not and cannot participate in any stock market rise - which has been substantial in the last two years. Of the improved solvency, the majority is down to releasing provisions set aside for legitimate mis-selling claims and the managed pensions review (drawdowns). For an interpretation of the contents, see chartered accountants Burgess Hodgson’s summary.

    Here’s how the press reported their conversations with Charles Thomson about the figures:

  • 07/10/2005 - THAT “exculpatory” letter

    Liz Dolan in the Sunday Telegraph (2 Oct) reproduced a scornful letter about the Treves and Thomson letter to policyholders (23 September). Mr Roy Honnor dubbed them as Tweedledum and Tweedledee and called their letter “exculpatory”. The Oxford dictionary defines it as "to clear from an accusation or blame", so he had a point. Click here to read the letter.

    Robert Shrimsley in the Financial Times’s wrote a satirical alternative letter to policyholders, under the heading: “Equitable Results: no-win, huge fees”. It’s a must-read

    The Financial Times, on Saturday 1 October, printed FOUR letters expressing outrage about the Court case settlement with E & Y:

  • 07/10/2005 - SUPERB summary in “The Lawyer”

    On 3 October, 2005 there was an excellent summary of the state of the legal cases by Catrin Griffiths in The Lawyer. She concludes that the E & Y legal representation was a “dream team”, with very little good to say for that of ELAS. WELL worth reading

    Also see Edward Fennel in The Timesonline 4 Oct 2005

  • 27/09/2005 - More good press worth reading

  • 27/09/2005 - E & Y were NOT exonerated

    The case collapsing does not prove there was not a case to answer – merely that the real core case was obfuscated. Fortunately, that case should now be brought by the profession in a Joint Disciplinary Scheme (JDS), which was on hold.
    Barney Jopson, FT Sept 24: “ E & Y face another ordeal”

    An excellent article by Teresa Hunter in Scotland on Sunday 25 September:

    Ruth Sunderland in Daily Mail 23 September: “THERE is something unseemly about the gloating by accountant Ernst & Young over the settlement of its High Court battle with Equitable Life….”

  • 27/08/2005 - A helpful ELAS time line

    The Guardian published a helpful schedule of key dates, which is largely accurate.

  • 08/08/2005 - EMAG Ltd EGM: 3 August

    More than 100 EMAG members attended the fifth AGM at the National Liberal Club. The two and a half hour meeting was packed with information. On the second investigation by the Parliamentary Ombudsman (Colin Slater), the cases in Court 76 (Nicolas Bellord) and the FOS and European Petition (Paul Braithwaite). The chairman, Tom Lake, explained the move to incorporation and thanked members for their ongoing support and generosity, noting that EMAG Ltd funding currently stands at a healthy £200,000 plus. Nicolas Bellord’s 14 personal weekly summaries of the trial are available on this website under the sub-menu lhs “Court Papers”. See all extracts from Colin Slater’s new presentation on background data submitted to PO 2.

  • 31/07/2005 - The government rejects PO recommendations

    The government isn’t obliged to act on any finding by the PO though historically it has - until recently. On 12 July 2005, the PO placed a report before Parliament on the treatment of Far Eastern internees in WW II.

    The Ministry of Defense accepted two of the conclusions but rejected two more. See: http://www.parliament.the-stationery-office.co.uk/pa/cm200506/cmhansrd/cm050713/wmstext/50713m02.htm

    This is an alarming precedent for Parliamentary democracy - since the PO is a hallowed office - and for the PO 2 investigation. MPs should be VERY concerned, but they’ve just broken up for 80 days. Dr Tony Wright’s select committee on Public Administration is bound to be extremely concerned and EMAG has made representations.

    The PO, Ann Abraham, is reported as having said:
    “…… those who are owed a "debt of honour" in recognition of the suffering they endured were entitled to expect the compensation plan would have been devised and implemented properly. It is of considerable regret to me that this did not happen.

    It is also deeply disappointing that the government has not accepted that it should properly remedy the injustice I have found was caused by maladministration."

    BBC 12 July

  • 16/07/2005 - The new TreasCom

    The Treasury select committee is the only body to wield ANY scrutiny over the omnipotent FSA – and that only on an ad hoc basis with limited success over split capital investments and nothing material on zeros. It has done nothing since mid-March and, now we’re nearly into Parliament’s summer recess, nothing much will get going until October. Meanwhile the FSA goes it own sweet way, unaccountable.

    The committee’s composition will have you thinking Groundhog Day; Chairman - Gordon loyalist John McFall Deputy unchanged, Tory Michael Fallon But David Ruffley is a welcome returning Tory MP.
    Sadly, LibDem Norman Lamb, who was a GREAT policyholder champion, has moved on to shadow trade and is replaced by the unknown to me Lorely Burt. For the full list click here.

  • 28/06/2005 - EMAG Ltd

    On 16 June, the newly incorporated EMAG Ltd held its inaugural board meeting, following on from the 43rd committee meeting of EMAG. The Equitable Members Action Group Limited is a company limited by guarantee. Click here to read the minutes.

  • 25/06/2005 - FSA’s annual meeting

    The annual public meeting of the FSA is to be held at 9.00am Thursday 21 July at The Brewery, Barbican. See the captains of industry in their natural setting along with their regulators.

    Your chance to cross-examine the FSA's behaviour over ELAS, closed Zombie fund supervision et al.

    Book your place in advance by ringing 020 7066 9010 or
    Email: events@fsa.gov.uk

    Per usual they would, of course, like advanced notice of your questions.

  • 18/06/2005 - The “Lost Sale” claim

    “Equitable faces indemnity costs claim of ‘millions’ after refusing to drop part of its lawsuit. Equitable could be forced to pay ‘millions’ extra in costs, after refusing to drop part of its lawsuit against former auditors Ernst & Young.

    The Big Four firm last week pledged to claim indemnity costs at the highest level from the life assurer, after Equitable refused to drop a claim against E &Y that it has barely mentioned in the course of the trial, now in its tenth week.”

    Alex Hawkes in Accountancy Age 16 June

    Accountancy Magazine 10 June
    (See also EMAG’s Quote of the Week 19 June, 2005)

  • 18/06/2005 - PO 2 progress

    EMAG’s committee met the PO’s investigative team on 25 May. Subsequently, a further delegation of six policyholder representatives was seen on 15 June. We were given privileged insight into progress to date and invited to finalise submissions to PO 2 by 1 July 2005. EMAG has commissioned accountants Burgess Hodgson to prepare its formal submission, the draft of which was discussed on May 25. It is now anticipated that the PO 2 report will be laid before Parliament, at the latest, in early January 2006.

  • 27/05/2005 - The ELAS AGM 18 May

    The TUC's Congress Centre in Bloomsbury was the new venue for the smaller but no less ostentatious AGM, with dozens of stewards and all the high-tech bells and whistles of a slick political party conference - astonishingly wasteful when annuitants face such a bleak future of yet more cuts.

    The board asserted that the Society has become more strong in 2004 and that Charles Thomson, who will take home £962,821 in 2005, is doing a great job. If only that could be said about his very recent shaky four days on the witness stand in Court 76.

    Vanni Treves reported on the board's "away-day" on future strategy which concluded three possibilities: Unitise, sell all or part, or more of the same. It was apparent that, for the next year at least, it's more of the same. This, because unitising requires another section 425 scheme with 75% approval from all classes to give up 3.5% annual guarantees (GIRs) and sale is very unlikely whilst the ELTA and the Court 76 litigations remain causes of uncertainty. The expensive long-term administration contract with Halifax is a distinct deterrent to predators who buy closed WP funds.

    Two dozen members asked questions and EMAG's John Newman made an excellent (see Stop Press) but was unsuccessful in his quest to become an ELAS director.

    To read comprehensive notes about the AGM by Paul Braithwaite, albeit his strictly personal impressions click here.

    Press coverage of AGM:

  • 11/05/2005 - PO 2 and international investors

    There's good news for international investors in Equitable: Whilst indications in 2004 pointed towards policies that were purchased out side the UK not being covered by the current Parliamentary Ombudsman study, it has now been confirmed that ALL policies will be covered.

    A letter from the Investigation Manager, Iain Ogilvie, dated 9 May, 2005 also spells out the limitations of the PO 2 study. The committee believes this will help EMAG's Petition to the EU (29/2005), since it details the extensive areas of regulatory supervision that PO 2 cannot address.

  • 23/04/2005 - GREAT strides with European Petition

    On 19 and 20 April EMAG sent a three-man delegation to Brussels. We saw a total of 10 MEPs, including one each from the leading UK parties, plus a Dutch and a Polish MEP. The golden globe must go to the Irish, who took an enormous and enthusiastic interest with six of their MEPs attended a briefing which was joined by the Petitions Committee's chairman, deputy and secretary. EMAG and policyholders could not have asked for a better reception. The Petition, number 29/2005, may be heard as early as mid-June but only after the Commission has prepared a legal briefing. Here's what leading high-energy Dublin MEP Proinsias De Rossa said after the meeting And here's what he has to say on his own website.

    EMAG has wholehearted admiration for Irish policyholders and their energetic MEPs. If the same energy had been forthcoming in the UK, one feels justice would by now have prevailed.

    This is the short summary of EMAG's Petition that the EU is translating for all MEPs from the 25 member states. You might like to send it or discuss it with your MEP. An easy way to write to your MEP is to use the internet and all you need is your postcode. See: http://www.writetothem.com/

    There are five UK MEPs who are actually on the vital-to-us-all EU Petitions Committee. Because he is deputy-chairman of the Committee, the most pivotal one is the Labour Party's Michael Cashman, MEP for the West Midlands.

    Diane Wallis, LibDem MEP for Yorkshire and Humber.

    There are two valuable Tory MEPs on the committee: Sir Robert Atkins, MEP for the North West and Roger Helmer, MEP for the East Midlands Finally, there's also a Labour Party Scottish MEP, David Martin.

  • 22/03/2005 - The Final Derek Morris Report on ActuariesThe Final Derek Morris Report on Actuaries

    On 16 March the final report was published. Read the Treasury's press release, summarizing the contents:

    Download the complete Report as a PDF file:

    The coverage by James Daley in The Independent, 17 March 2005:

  • 03/03/2005 - Write to an MEP about EMAG's Petition 29/2005, now!

    EMAG asks that you, PLEASE, to take the time to write to an MEP and make him or her aware of the Equitable Life scandal, about how investors have been abused by the Treasury, point them at EMAG's Petition (29/2005) and request their active support now. You can find out the names of all the 78 MEPs (as well as councilors and MPs) that represent your region, and where to write to them via this simple to use service: http://www.writetothem.com/

    There are five UK MEPs who are actually on the vital-to-us-all EU Petitions Committee. Because he is deputy-chairman of the Committee, the most pivotal one is the Labour Party's Michael Cashman, MEP for the West Midlands: http://www.eplp.org.uk/labmepsingle.asp?fname=Michael&lname=Cashman%20MEP Why not Email him you really think (!) to: mcashman@europarl.eu.int

    Given that the LibDem party, in the guise of Chris Huhne MEP for the South of England, introduced the EMAG Petition to the EU, probably our most important ally should be Diane Walsh, LibDem MEP for Yorkshire and Humber: http://www.dianawallismep.org.uk/

    There are two valuable Tory MEPs on the committee, very well worth contacting: Sir Robert Atkins, MEP for the North West http://www.sir-robertatkins.org/ and Roger Helmer, MEP for the East Midlands: http://www.rogerhelmer.com/
    Finally, there's also a Labour Party Scottish MEP, David Martin: http://www.eplp.org.uk/labmepsingle.asp?fname=David&lname=Martin%20MEP

    Best of all, why not make the time to attend the clinic of your local MEP to discuss the matter, and take along a letter setting out the case? Do go the extra mile, not least on behalf of 15,000 non-UK fellow European investors who also suffered at the hands of Gordon Brown and the British Government!

    In our EU Petition, EMAG alleges that the UK Government has systematically failed to address the injustice perpetrated on Equitable Life policyholders. Hence, we have been obliged to go over the head of the UK legal system and appeal to a higher authority that does not have a vested interest. The behaviour of the UK Treasury since 1998 has been consistent determination to sweep this scandal under the carpet, deny culpability and to seek to avoid establishing any precedent. To policyholders it looks and smells like a cover-up. In the 1990s the UK Government embraced the European single market and encouraged life companies like Equitable to exploit the attractive new sales opportunities. However, the UK has not fulfilled its legal obligations under European Community Directives to provide all citizens with investor protection and remedy for lax or failed regulation.

  • 18/02/2005 - What happened in Court - in full

    The final High Court case progress review took place on 4 February and there were short reporting pieces in the Financial Times and the Daily Telegraph. Paul Braithwaite was there for EMAG and has prepared an in-depth summary of the proceedings. He alerts us to the fact that for both E & Y and Equitable, the legal costs are running up daily NOW at a phantasmagoric rate, in preparation for the trial's commencement on 11 April. He reports on a couple of startling revelations such as:

    "I detected a very interesting strand of attack by E & Y: Hapgood QC made reference to a question from ELAS's new auditors PWC in October 2001 which suggested the accounts for 1999 should be re-issued. Not unreasonably, E & Y have demanded ALL internal ELAS papers on how that suggestion was handled by ELAS, be it board minutes or papers from the new ELAS audit committee. Incredibly, ELAS has reported to Court that it simply cannot find any relevant papers. Hapgood said that it wasn't good enough and proposed, instead of a digital word search, a paper search should be conducted. Langley J. agreed.

    All the while, long-serving ELAS executive and actuary Alistair Dunbar (with Tony McGarahan and director of ELAS Fred Sheddon) sat near me. Dunbar probably knew all the answers (and where all the papers are or were). The re-issuing of 1999 accounts proposed by PWC must have been a very hot potato and policyholders are now entitled to ask why PWC's proposal was not actioned by the current board.

    As with the Penrose Inquiry, this board seems to display reluctance to divulge ANY papers from its own period of stewardship, post 1 March 2001. The significance of this is that during the autumn of 2001 PWC were prepared pivotal half-year accounts to 30 June 2001 as the very foundation for the compromise section 425 agreement. If the 1999 accounts HAD been reissued at that time, it could well have had an destabilising affect on the compromise. It is to be hoped that ELAS will now find said papers. Milligan argued that what happened in 2001 was irrelevant but Langley J. rebutted: "It must be relevant." Read Paul Braithwaite's report here.

  • 04/02/2005 - Press Coverage

    Watchdog cost Equitable policyholders up to £60m
    By James Moore, Daily Telegraph

    Documents seen by the Telegraph showed that the society told Ruth Kelly, then Financial Secretary to the Treasury, that it wanted to buy back the bonds by the end of 2003 if the Financial Services Authority approved.

    However, it is understood that the key passages were removed from the document shortly before publication.

    The draft summary also said that Equitable and the Financial Services Authority were at loggerheads with the Financial Ombudsman Scheme over how much compensation the society should pay to people who pulled their savings out before a financial compromise deal that was destined to preserve its financial health and would have banned them from suing for mis-selling.

    Equitable warned that the potential bill for compensating these people, who have complained to the ombudsman that they were mis-sold policies by Equitable because it failed to tell them about its financial difficulties, could result in a significant setback to its recovery.

    Read more

    Treasury keeps Equitable papers secret
    Ruth Sunderland, Daily Mail

    THE Treasury is holding back the publication of sensitive documents relating to the near-collapse of insurer Equitable Life. Officials have released a number of papers relating to the Equitable disaster on the Treasury website following a request under the new Freedom of Information Act.

    Read more

    Protection for mutual members shelved
    By Christopher Adams and Andrea Felsted, Financial Times

    The Treasury has shelved plans for a bill to protect Equitable Life policyholders from creditors should the mutual life assurer become insolvent, despite angry protests from its management and action groups.

    The documents from the Treasury revealed details of tense correspondence between ministers and the assurer's management. They showed that Charles Thomson, Equitable's chief executive, complained at the lack of progress on the legislation and wrote of the need to give policyholders the "comfort and certainty" that they would be protected.

    Paul Braithwaite, general secretary of the Equitable Members Action Group, supported Mr Thomson's "serious request". He said: "The fact is that Equitable's solvency is still a question mark and it would be a brave man who would guarantee there is no risk."

    Read more

  • 04/02/2005 - The Treasury and Freedom of InformationThe Treasury and Freedom of Information

    Under the new Freedom of Information, the Treasury published on 2 February a number of documents about Equitable, which led to articles in the Telegraph, Mail and Financial Times.

    A close examination shows that what was revealed was exclusively letters FROM Equitable to the Treasury. What is missing is the internal papers between the Treasury and the FSA. Freedom of information - yes - but only free with third party's information! That's pure smoke and mirrors deceit. Read all the disclosures here.

  • 04/02/2005 - The FSA revamps the FOS's board

    How very suspicious that the timing of a total revamp of the FOS's board should quietly have been announced on January 25. You may think it odd that the news appeared, NOT on the FOS's website, but on that of the FSA. But this is understandable when you take on board that it is the FSA's task to appoint all the directors of the FOS. The City has complained consistently about the over-generosity of settlements by the FOS and it is the City that pays the annual running cost of the FSA - now £220m pa. It is astonishing to realise that the FOS employs a staff of 1000.

    So, we witness the substitution of Sir Christopher Kelly KCB for Sue Slipman and the recruitment of no less than five new Establishment figures and only four of the old FOS board go forward. Read the full announcement here.

    One wonders whether these appointments flag a change to a greater degree of "compliance" at the FOS.

  • 04/02/2005 - EMAG dialogue with the FOS's board

    The chief ombudsman, Walter Merricks, has been confronted by a formal submission from Equitable that - contrary to undertakings made by Ruth Kelly, the then responsible Treasury minister in March 2004 that the FOS was available to adjudicate any new claims based on evidence in Lord Penrose's report - the FOS should NOT now proceed as promised with any new Penrose-based complaints. EMAG made a substantial formal submission on December 21.

    EMAG felt the matter to be of such importance to the independence and future of the FOS that it took the unprecedented step of writing to every non-executive director of the FOS on 14 January. Click here to read the letter.

    To the EMAG committee's consternation we received a reply from the chair, Sue Slipman, which appeared to have misunderstood EMAG's letter. Click here to read the letter.

    In consequence EMAG wrote again to all board members to reiterate our position. click here to read the letter. It has been established that the letter was distributed before the FOS board meeting of February 3, which was the last one that will be chaired by Sue Slipman.

    An interesting round-up article in the Financial Times by Rob Budden on January 21, including the position of the FOS

  • 20/01/2005 - Press coverage of the issues raised

    A great deal of ELAS-related information is available to download from the FOS website here.

  • 20/01/2005 - The FOS between a rock and a hard place

    The Equitable wrote to Walter Merricks on 15 November 2004, arguing that the FOS should not, for any one of a number of reasons, look at all at new Penrose based mis-selling complaint. EMAG, and retired solicitor Nicolas Bellord, have made strong submissions as to why the FOS should proceed - as held out to policyholders by the Treasury last March.

    On Jan 12 EMAG held a press briefing to highlight the enormous pressure that the FOS faces - not only from ELAS but also EMAG suspects from the FOS's parent body, the FSA, which seems every step of the way to bend over backwards for Equitable's board. Equitable is obviously a company that has taxed the FOS to the hilt, as evidenced by it finding in May 2003 in favour of thousands of late-joiners that they had indeed been mis-sold - and yet, 20 months on, the FOS has been unable to recommend the actual level of compensation since the Society is applying every legal argument it can muster.

    Read ALL about it:
    Equitable's argument (27 Oct 2004) that the was NO over-bonusing and Lord Penrose got it wrong. Click here to read more.

    EMAG's commission of forensic Chartered Accountants Burgess Hodgson report evaluating the same period and issues. Click here to read PDF.

    The technical analysis substantiating the Burgess Hodgson report. Click here to read PDF.

    The Equitable's submission (15 November, 2004) to the FOS on dropping adjudicating new claims. Click here to read PDF.

    EMAG's response to the FOS (21 December, 2004). Click here to read the letter.
    Retired solicitor Nicolas Bellord's personal legal submission to the FOS. Click here to read the letter.

    EMAG's press release of 12 Jan 2005. Click here to read the press release.

  • 08/01/2005 - EMAG's European Petition

    Finally, we have a reference number for the EMAG petition, which was delivered by EMAG's Paul Braithwaite and MEP Chris Huhne MEP in Brussels on 8 December 2004.

    The Petition's number is: 29/2005

    EMAG appeals to current and ex policyholders to write to their MEP, urging their support and quoting this petition number. This is even more important for readers who reside in Europe, outside the UK.

    EMAG has established that there are of the order of 15,000 such investors in Equitable's With Profits fund who did not make their policy purchase in the UK. In the Republic of Ireland there were 8,300 investors with an average policy of £27,000. In Germany, another 4,000 people, with an average investment of over £20,000. From just these two countries there was more than £300m invested, and these individuals will not be covered either by the PO 2 Investigation, nor can they appeal through the UK Financial Ombudsman Service. This is a compelling reason why European MEPs should investigate the UK Governments failure to provide protection or remedy to citizens across Europe - not just in the UK. Please, read EMAG's Petition and write to your MEP seeking his or her support.

    James Mawson and Andrea Felstead in the Financial Times, 8 January, 2005

    "Equitable members go step nearer to court

    Equitable Life policyholders have had their chance of legal action boosted after the European Parliament called on the Commission to investigate allegations that the British government failed in its regulatory duties.

    The parliament's petitions committee, which aims to provide redress to European citizens, has asked the Commission department responsible for the internal market to make a preliminary investigation into the allegations.

    A parliament official said yesterday: "We are taking this very seriously. There is no question that it is an admissible petition, in the sense that it is related to an issue of European Union activity and competence, namely the [implementation of] EU insurance directives."

    This could be brought before the British courts or, ultimately, the European Court of Justice. The Commission could also begin infringement proceedings against the government for allegedly not applying the directive properly."
    Click here to read more.

  • 01/01/2005 - The lacklustre Paul Myners review of the governance of Mutuals

    The Myners review was published during the political black hole period just before Christmas. As with the huge Treasury select committee study into "Restoring confidence in long-term savings", it generated almost NO press comment. It was pretty toothless, though it will cause the board of Standard Life new hurdles in their quest to demutualise. For a study precipitated by Equitable and the Penrose report, astonishingly, there is no commentary particular to ELAS. A lost opportunity, despite an enormous contribution by EMAG (see Vital Reports sub-menu).

    Click here to read more

    The recommendations include:

    • Promoting greater engagement by life mutuals of their members, through guidance on fair and accessible voting procedures on a member relations strategy. This includes promoting dialogue with members as well as facilitating communication among members. Members also have a clear responsibility to look after their own interests as the effective owners of life mutuals;
    • Proposals to better inform life mutual members and the market through providing better information, including on directors' remuneration, and for large mutuals, publication of forward-looking strategic information in the form of an Operating and Financial Review;
    • Promoting adherence to best practice corporate governance through producing a life mutual specific piece of guidance. This takes the form of a number of annotations to the Combined Code to reflect the particular characteristics of life mutuals. The Review's objective is that this Code will be used by the FSA as its benchmark when it looks at governance as part of its risk monitoring process;
    • Proposals that give particular prominence to the need for a strong independent element on life mutuals' boards, and underlines the importance of board appraisals. Monitoring of business risks should be an explicit function of the non-executive directors; and
    • Helping equip non-executives to deal with the challenges they face in monitoring a complex, technical business. Proposals in the report aim to foster informed discussion and challenge. The company secretary or equivalent in friendly societies has a very valuable and pro-active role to play in this regard and in supporting non-executives more generally.

    From ELAS's submission to the Myners' Review: You couldn't make it up!
    One section to cause some wry smiles for ELAS policyholders is the submission made to the Myners review:

    Re Question 7: "In relation to Equitable Life, various action groups have been established to represent members but care needs to be taken as, in many instances, these groups may have their own "agenda" and not be representative of the wider membership. They can cause disruption and unnecessary expense to members generally.

    Q10. Is there a further role for the FSA to play in improving firms' corporate governance? The FSA's role at present is, largely, to identify whether or not individuals are "fit and proper" for the roles that they take. It is not immediately obvious that further involvement by the FSA would be constructive. Care needs to be taken that the FSA does not, in effect, become a shadow director of the life office."


  • 01/01/2005 - Press comments

    Neil Collins' Telegraph City Comment 18 Dec.
    "This is one the actuaries really cannot overlook:
    The man in the hot air balloon shouts down to the man on the ground: "Where am I?" "You're in a wicker basket suspended from a hot air balloon" comes the reply. "Are you an actuary?" asks the balloonist. "Yes. How did you guess?" "Because your reply was completely accurate and absolutely useless."
    Yesterday those of us who always suspected as much at last got confirmation. An actuary may have a brain the size of a planet, but when it comes to seeing beyond the end of their mortality tables, they have proved themselves about as good at spotting problems as, say, a financial journalist.
    A couple of jobs ago, Ruth Kelly asked the former chairman of the Competition Commission, Derek Morris, to take a look at the actuarial profession, and his report is a corker. Insular, inflexible, and often offering a false sense of security are some of his more printable conclusions. As he doesn't quite say, these people failed to warn companies of the real risks they were running in offering final salary pension schemes,
    Ms Kelly's move was, of course, merely the usual mechanism for getting the Government round the awkward corner of the Penrose report. It had savaged the Government Actuary's Department, but this will surely not suffer the usual fate of such documents.
    It is a bomb under a well-rewarded, complacent profession full of people who are so brainy that they couldn't see through their own statistical fog. Well, they can now." Last section of:


    Financial Times 18 December:
    "The UK actuarial profession, which exerts enormous influence over how people save for the long-term, is to be regulated for the first time under proposals unveiled on Friday.
    A government inquiry, led by Sir Derek Morris, found that the profession has been insular and too slow to adapt to changing circumstances.
    The interim report also revealed that the profession has weak professional standards and has been subject to too little scrutiny and market testing of the advice it gives.
    Sir Derek was appointed to lead a review of the actuarial profession and to recommend steps to improve its performance following the near-collapse of Equitable Life, in which thousands of people lost part of their life savings. A report on the affair by Lord Penrose concluded that the actuarial profession had significant weaknesses that had contributed to Equitable's problems."

    Liz Dolan's Christmas fantasy in Sunday Telegraph 19 Dec:
    "What are you getting for Christmas?" he (a young Leo Blair in No 11 Downing Street to Father Christmas) mumbles, sleepily.
    "Nothing much. Money's a bit tight. I don't suppose the name Equitable Life means anything to you, does it?" Leo doesn't answer. He is asleep.
    "I know what I want for next Christmas," Father Christmas continues quietly to himself. "I want the Parliamentary Ombudsman to tell your dad and John's dad to give me back my pension. And I want the same for all the other Equitable Life pensioners - and, while we're at it, for all the people who've lost their company pensions."
    He picks up his rucksack. "That would be the best Christmas present ever."
    Click here to read more

  • 01/01/2005 - Sir Derek Morris report on the actuarial profession

    The Government asked Sir Derek Morris to conduct a wide-ranging independent review of the UK actuarial profession. Sir Derek Morris has published his interim assessment. This has proved to be more valuable to policyholders than the toothless Myners Review of Governance (see below).

    The issues identified in the interim assessment include:

    • the profession overall has been too insular and slow to adapt to changing circumstances;
    • there has been insufficient transparency in actuarial advice;
    • there has been inadequate scrutiny, challenge and market-testing of actuarial advice by users: such as some pension fund trustees and Boards of insurers;
    • there has been a lack of clarity about the accountability of actuaries to the wider public interest;
    • in the past the educational syllabus has failed to take full account of developments in actuarial and non-actuarial thinking;
    • professional standards have been weak, ambiguous or too limited in range; and perceived as too influenced by commercial interests;
    • self-regulation has not been sufficient to address these issues.

    The review identifies a number of weaknesses in the current self-regulatory framework of the actuarial profession: including weaknesses in professional actuarial standards; inadequate protection of the interests of consumers and pension scheme members and the perception that commercial interests may have superseded the interests of the wider public.
    Click here to read more

    Click here to read the full 200 page report.