The following letter was delivered to 11 Downing Street on Monday 6 August 2001.

Rt Hon Gordon Brown

Chancellor of the Exchequer

11 Downing Street


Dear Chancellor,


Equitable Life:  We shouldn't wait for a post mortem. We need the Treasury to be proactive.


A week ago, four Action Groups representing 70,000 policyholders wrote to you ask for an urgent meeting.


That letter included:


"The effect of uncertainty is causing distress to many…………

panic withdrawals are making the situation worse by the day."


In the intervening week the quality press has contained dozens of reports that have fuelled the panic and a rush for the door.  The direct consequence of an Equitable "meltdown" could be incalculably detrimental to the pensions industry and the government's endeavours to encourage self-provision through stakeholder pensions.


Action groups are being besieged by deeply distressed policyholders - many of them old and frail.  It is our impression that the fund is now being decimated and the Society cannot cope with the deluge of departures. 


The FSA is meant to ensure orderly financial markets.  The panic is partly because the FSA has neither intervened nor ensured in 2001 that there is adequate financial information for IFAs and policyholders to make informed decisions.  In consequence there has been a breakdown of confidence. The Treasury, with its role to oversee the FSA, is where "the buck stops".


Of course, overall responsibility lies with mistaken decisions taken by Equitable's boards over more than a decade.  But time and again the series of regulators could and should have stepped in to protect policyholders. 

The regulators have failed policyholders and, along with management, they effectively concealed and condoned Equitable's increasingly parlous state. 

The excellent Treasury Select Committee interim 10th report (March 27th) identified that there is prima facie evidence of these repeated regulatory failures going back to 1993.  Howard Davis admitted at the FSA's AGM on July 20th that in January 1999 the FSA "inherited a flawed regulatory framework".

Thus far, the Treasury has sought to distance itself from the Equitable. It charged the FSA to report on itself, strictly between 1999 and closure of the Society in December 2000.  Now we're told, "We must wait until the report is published", recently delayed at the 11th hour until the autumn.

Further, the Treasury has said that it's a matter for members and their board.  But mutuality as a form of governance in a Society with an archaic constitution and an incompetent self-serving board renders it, quite simply, impossible for members to exercise discipline.  Particularly when the regime is supported, back to back, by the regulators acting hand in glove with the regulated. 

There is no visible evidence that the FSA has been active on behalf of policyholders since closure despite, arguably, several circumstances in which it should have been.  The financial fundamentals of the Society have changed very little since December, hence we argue that the FSA should have intervened to protect policyholders last December, instead of hoping that sale and a new board would muddle through.  I attach a comprehensive paper providing the details. We maintain that by not acting the FSA has failed policyholders' "reasonable expectations", particularly in the last seven months, currently and suspiciously excluded from scrutiny.

Just because the "middle-Englander" policyholders are not the kind to take violently to the streets doesn't mean that they are not hurting and deeply aggrieved.  Given their respected positions, it would be imprudent to leave them "hanging out to dry".


The large number - 850,000 or so - who have remained loyal and have lived with months of financial anxiety, need and deserve the immediate intervention of the Treasury to shore up this once fine Society that is in danger of becoming the scourge of the pensions industry.  This includes tens of thousands of distressed annuitants who are locked in and face declining incomes, despite their prudent self-provision over decades.


The Action Groups hope for a very early meeting to discuss how the Treasury can orchestrate a rescue and avert an inequitable disaster.


We should not wait for a post mortem - it's time for the Treasury to be proactive.


Yours sincerely,



Paul Braithwaite


The Equitable Members' Action Group