International Members - ICELP Submission 

Last Updated: Thursday, December 02, 2010 02:53 PM

Margaret R Felgate

P 0 Box 310 Mijas Pueblo, Mijas 29650 (Malaga) Spain


The Chairman

Independent Commission on Equitable Life Payments

Eastcheap Court

11 Philpot Lane

London EC3M 8UD


29 November 2010    (advance copy by email)


Dear Mr Pomeroy,


I wrote to you on 29 September 2010 with regard to 33,500 ELAS international/overseas policyholders. In our submission I set out how our large group was sold policies from the jurisdictions of Eire 16.500, Germany 10,500,  Dubai 2,500 and Guernsey 10,500.  All overseas policyholders were told our funds were invested in a separate offshore fund but in fact every one of us were unknowingly invested in the same “UK Ponzi” scheme which Equitable perpetuated from the middle 80’s.


This is a clear violation of Conduct of Business regulation, but the UK Government has been extremely careful that any Conduct of Business investigation into Equitable Life has been avoided. It is worth pointing out that the actuarial disciplinary committee (see below) considered the major criticism of Roy Ranson was that he put different classes of policyholders in the same fund.  Overseas policies were not only mixed in with UK policyholders funds but were also mixed in with UK GAR policyholders; however,  ALL overseas policies sold were non-GAR policies. 


http://www.actuaries.org.uk/research-and-resources/document  “On the third charge, which the panel considered to be the most serious of the charges against Mr. Ranson, the panel found a failure to properly distinguish, in spite of the significantly different terms and conditions, between the pension policies issued prior to 1988 and those subsequently issued both in internal analyses of the financial performance and in communication to policyholders.  The panel found this failure created the basis for the subsequent problems of the Society”


Policies were sold to residents of Australia, Barbados, Bahrain, Belgium, Botswana, Brunei, Canada, Channel Islands, Chile, Cyprus, Dubai, Eire, France, Finland, Macedonia, Malaysia, Mozambique, New Zealand, Norway, Portugal, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Tanzania, Thailand and the USA. One thousand two hundred pension policies were also sold to staff at the Universities of the West Indies.  Their pension funds totalled GBP 45 million.  The total value of the overseas funds at 3l December 2000 according to Equitable Life was GBP 980.7 million.


We are extremely concerned about how the UK Government  intends to compensate all overseas policyholders, some of whom may be UK citizens but many who are non UK citizens. Legally non UK residents cannot in any way be subject to UK public purse considerations.  They must, therefore, be compensated in full for their total losses as recommended by EQUI.  That body decided that EU Life Directives were not implemented and that EU passporting procedures were defective.


Under the present compensation scheme, there is no democratic way the UK authorities can meet their international obligations to compensate overseas policyholders in full as per the EQUI report and the unanimous adoption of that report by the European Parliament. The very minimal sum of monies your committee is tasked to distribute would provide overseas policyholders with barely 10% compensation for their actual losses.  The EU authorities could hardly be persuaded that their nationals should be forced to accept a 90% cut in their compensation for loss, caused by the failure of the UK Regulators because their loss is now subject to UK public purse considerations.  As a result some parties are worried that HMT may be planning to “buy off” the groups in Ireland and Germany to avoid a return to the EU/European Courts given that the European Commission has not been consulted in the UK Government’s compensation process.


The situation is further compounded by the very serious problem of missing data. Sir John Chadwick wrote about the data problem in his second interim report. Amazingly, data are NOT available prior to the end of 1997 for international policies.  How could your committee possibly go about ascertaining the true losses and compensation due to us under these circumstances? 


Many overseas polices have been in force since 1990 so there are at least seven years missing data. Overseas policyholders require to know the reason such a serious situation came about, when properly and readily available insurance data are required by law and good practice to be kept for many decades. This is an obvious requirement, particularly for in force and relatively recently matured policies. Official sources have until recently said that the data were missing entirely;  however Equitable’s new Chief Executive stated that some old archival data has now been located.


The international policyholder problem has two main aspects.  The data issue is clearly your Commission’s  urgent concern, whereas by the criteria of EU/International Law and the findings of EQUI you cannot succeed given your existing Terms of Reference. And as well you know, the data issue has even wider ramifications, because in fact there are no readily available data for any ELAS policies prior to 1992 very conveniently covering the period when Equitable’s main financial problems developed!  But here again some archival tapes in an older electronic format have come to light!  It is yet another illustration of obfuscation, evasion and outright lies by the previous management of Equitable and the FSA which was the UK Regulator for overseas policies.


The international policyholders ask ICELP officially to request Equitable’s help in getting their archival data read in.  It is an essential first step whatever happens next. Your existing Terms of Reference do not require you to get all the pre-1992 data read in, partly on account of which it currently appears that, like their UK counterparts, pre-1992 international policyholders will not be eligible for compensation at all!!  For the record overseas policyholders state their strongest objection to this. We reserve the right of comment on it in both the UK and the EC/EU.


You may recall that as a Guernsey policyholder I have been in correspondence with the Guernsey Financial Services Commission, which has asked that its policyholders be treated in the same way as both UK and other international policyholders.  That ought to preclude any side deals of the type earlier referred to. But once again it raises questions about the legitimacy of a UK local compensation process which arbitrarily excludes many policyholders both UK and International, and post 1992 with-profits annuitants excepted, awards the remainder only a very small fraction of their actual losses.


Efforts are currently being made to get pre-1992 policyholders included, in which event the international policyholders should also be eligible.  Your Terms of Reference might then change accordingly. But if compensation is still to be for only a small part of international policyholder losses, then by International Law, EU and EQUI criteria you will have failed in a large part of your task.  The ultimate consequences of such a failure cannot at this stage be foreseen.


Yours sincerely,


Margaret R Felgate




Mark Hoban MP,  Financial Secretary to HM Treasury

Ann Abraham, The Parliamentary Ombudsman

Jonathan Scheele, Office of the European Commission, London    

Karel Van Hulle, Directorate General, Insurance and Pensions, European Commission

Elemer Tertak, Directorate General, Financial Institutions, European Commission

Marguerite-Marie Brenchley, Political Section, European Commission

Mairead McGuinness MEP  

Sharon Bowles MEP, Chair of The EU Parliament’s Economic & Monetary Affairs Commission

Diana Wallis MEP  

Peter Harwood, Chairman,  Guernsey Financial Services Commission (GFSC)

Dr. Michael Nassim

Dr. Andrew Goudie    

Nicolas Oglethorpe

Michael Josephs   

Peter Scawen, Equitable Members Trapped Annuitants (ELTA)

Equitable Members Action Group (EMAG)