Last Updated: Saturday, February 01, 2003 01:36 PM


from left - David Ward, Charles Thomson, Tony McGarahan (click here for larger photo)REPORT OF NORWICH MEETING OF EQUITABLE LIFE SUFFERERS



(See below press release for background information)


Battered but defiant, those most  long suffering of souls, Equitable Life victims, braved the arctic conditions to register their displeasure in the Assembly Hall.    Facing them were two big hitters – in the Government corner, Charles Clarke MP, Secretary for Education and also an Equitable victim.   In the Equitable corner, Charles Thomson, CEO of Equitable Life.  Not, though, at the same time, Mr. Thomson for some unfathomable reason not wishing to share a stage with Mr. Clarke and other local MPs.


By hideous irony, the meeting came the day before the latest of the vicious blows to hit Equitable’s customers came into force – the reduction of up to 30 per cent of the pensions paid to with-profits annuitants.   Policyholders had seen massive cuts in their policy values, a huge exit penalty  inflicted if they moved their money to safer havens, but the annuitants , being unable to move, are trapped.    The with-profits fund is being rapidly depleted to pay for Equitable’s past mistakes and pathetic failure of the Government appointed so called ‘regulators’ to regulate what was obviously a growing problem in that Equitable promised generous guarantees for policy payouts which it could not meet as it neglected the little matter of reserves.


The  opposition MPs, Norman Lamb and the agent representing Richard Bacon  (stuck in a snowdrift), showed accord in condemning the slowness of Penrose, the Parliamentary and Financial Ombudsmen and the Complaints Commissioner.


Charles Clarke not unexpectedly toed the party line and praised New Labour for setting up Penrose to investigate how Equitable had got into this sorry state, along with the PO’s investigation, to a weary audience, who’d heard it all before.


Questions thrown at Mr. Clarke were predictable.   Bearing in mind the Government’s culpability, through its abysmally performing Treasury-appointed financial regulators, why was it insistent on waiting for the Penrose Report before even considering the matter of compensation?  When would Penrose finally report?    And, from one jaundiced cynic, if Penrose criticised the Treasury, would the Government allow his report ever to see the light of day?   Clarke declared a hope for total openness for the future of savings and pensions, but quoted the old caveat of would people talk to an inquiry if they thought publication could compromise them?    Norman Lamb MP added to the gloom by quoting Ruth Kelly, Secretary to the Treasury’s, proviso that legal or commercial confidentially aspects might cause parts of Penrose to be kept secret. 


A letter from an elderly, sick annuitant, not only facing cancer but also a 30 per cent of his income evaporating, was read out.   “Live for today, let the State sort out your future” it recommended, which brought a discreet cheer.   Challenged with the prospect of millions of OAPs throwing themselves on the tender mercy of the State after a life of wild profligacy, Clarke skated again through the heroic efforts the Government would be making to make the savings industry safe and well regulated, to the faint sounds of stable doors clanging shut.


Gordon Brown’s raid on pension funds was brought up, to tumultuous applause –Clarke sprang to G. Brown’s defence, declaring that his fiscal strategy, including the raid, had helped make the UK strong economically, and actually said it with a straight face.


The main attraction, Charles Thomson, plus minder McGarahan, in house PR guru, reiterated the position of Equitable, quoting stock market decline, the fire sale of equities, the depressing list of the Society’s liabilities, the ghastly prospect of further stock market falls on Equitable’s solvency.  


He reassured nervous souls that if Penrose uncovered dodgy doings and blatant misregulation, then naturally Equitable would take appropriate action in chasing up compensation.   He even said ‘sorry’ to the beleaguered with profits annuitants but reassured them the slicing of their income was unavoidable, and mused that were it not for the current market doldrums, the compromise agreement would have seen the long suffering Equitable victims more or less right and the current inequitable situation would not have arisen.   He skated elegantly round a question regarding the fees paid to Burson-Marsteller, late PR consultants but expressed satisfaction at their performance in the voting through of the Compromise Scheme.


No-one threw things and there was hardly a raised voice.   Equitable victims shuffled off out into the snow, no doubt pondering that Equitable put on a good show.   Pity it was the same old show as before, and no Good Fairy appeared at the end to wave her wand and make everything all right.


A camera team from the BBC’s Money Programme filmed extensive clips for use in Thursday 27 March programme, which has been researched in many locations. The programme, as we understand is to be devoted exclusively to the Equitable affair.


Reporter: Gabrielle de Pauw (Norwich  31 January 2003 1400hrs)



The Assembly House, Theatre St., Norwich, Friday, 31st. January 2003 at 11.00 a.m.

NOTES for Editors.

1.       The collapse of Equitable Life, from 1762 the oldest mutual life insurance company in the world, is a complicated story with just TWO essential elements.


A.           The Prudential supervisor (H.M.Treasury) let Equitable run critically short of money.

               NOTE. “Prudential” is not the Insurance Co!! It just means “looking after solvency”.


B.           The Government’s “Conduct of Business” (improper selling) supervisor was the Securities and Investment Board which failed to do its job. H.M.Treasury had the power to force it to perform or to disband. It did not use that power.


2.       Explanation of A. above.


(i)           From the 1950s until 1988, and, for then existing policies until 2001,  Equitable guaranteed high pension rates for which it made no reserves. Members could add to their funds when they chose.


(ii)          When interest rates went down from 1993, the guaranteed pensions became valuable.


(iii)         Equitable tried to cut bonus to people taking the guarantees. The House of Lords in the Hyman case stopped this in July 2000.


(iv)         The guarantees and their unquantifiable amount (payments in could still be made by existing policy holders with returns miles above market returns) meant that Equitable was unsaleable. It had to close to new business in December, 2000.


3.       Explanation of B. above.


(i)           The Financial Services Act, 1986 allowed the Government to delegate the supervision of “Conduct of Business” (improper selling) in the financial services industry.


(ii)          “Conduct of Business” was delegated to the Securities and Investment Board. SIB had the power to regulate Self Regulating Organisations, of which all providers had to be members.


(iii)         Equitable joined the Life and Unit Trust Regulatory Organisation (LAUTRO) which later merged with the Personal Investment Authority (PIA).


(iv)        Equitable engaged in mis-selling on a mass scale (See the Opinion of Nicholas Warren QC) It concealed from thousands of new buyers the existence of liabilities for which it had not provided. At the same time Equitable did not give new policy holders the same valuable guarantees. New buyers since 1988 now have to subsidise guaranteed pension holders, but were not told of this risk when they bought their policies.


(v)          LAUTRO/PIA let this happen. The SIB did not ensure that LAUTRO/PIA did its job.


(vi)         Government tried and still tries to wash its hands of the whole affair.



(vii)        The 1986 Act gave H.M.Treasury the power at any time to revoke the delegation to the SIB which had to report at least annually to the Treasury, which had in turn to lay that report before Parliament.


(viii)         H.M.Treasury did not exercise the control reserved to it. The Equitable disaster followed.


4.       The Numbers who have suffered loss.


(i)           Equitable is always reticent and gives out only its own message. However, best estimates follow.


(ii)          At closure to new business in December 2000 about 1.1 Million policies are believed to have been in force. Some are Unit-linked, so holders are not in the With Profits Fund and subject to its risks. However, Unit-linked policies ARE at risk in a Liquidation of Equitable. In that event they are subject to reduction (Authority: the FSA and the Baird report)


(iii)        At the same date, there are believed to have been about 450,000 policy holders. There was a large number of company schemes with many employees under one single policy.


(iv)         In February 2001, Equitable told Nicholas Oglethorpe that there were about 65/67,000 With Profits Annuitants. They cannot move from Equitable because Equitable will not allow this. In any event, the terms would be dire.


(v)          ALL those annuitants will from 1st. February 2003 start to suffer pension reductions of up to 29%.


(vi)         ALL other Members of the With Profits Fund of Equitable have already suffered large cuts in policy values and often severe exit penalties in addition.


5.       Isn’t there a compensation scheme? Yes, but:-

          *        it only pays part of losses

          *        it has never been used

          *        payment will be fought bitterly by the industry who would be expected to contribute according to turnover having suffered dreadful Stock Market losses

          *        it would take for ever to pay out


6..      Contacts. David Ward and Nicholas Oglethorpe are both W-P Annuitants living in Norwich.


(i)           David will chair the meeting. He will be pleased to deal with general questions about     Equitable’s behaviour and about the aims of the meeting. He is at 01603 452330.


(ii)          Nicholas is helping to arrange the meeting. He is able to deal with many detailed questions which arise about Equitable and how Government let the public down by failing to keep it safe. He is at 01603 454210 or 250026.


(iii)         It is NOT intended to bring forward individual hardship cases to the media. Sad though these cases often are, the public interest will best be served by emphasis on the collapse in public confidence in the Pensions industry and Government reluctance to deal with it.


Further reading:-  Essential. www.equitablelifemembers.org.uk . (A mine of information with all press comment, constantly updated. A journalist needs no more.)


Notes compiled by Nicholas Oglethorpe (January 2003)      





(Norwich – 31 January 2003)


On the day before Equitable with-profits annuities will plummet by as much as 29%, East Anglian pensioners and policyholders have hired a hall in Norwich to stage their own “Any Questions?” with local MPs and a Director of the company. The initiative is seen by annuitants David Ward and Nicholas Oglethorpe who have organized the meeting at their own expense, as the chance for frank exchange of view about where the company is now, and what strategies exist among key players to make the best of the pensioners’ plight.


Local MPs have readily rallied to the cause. Cabinet minister Charles Clarke (Lab. Norwich South), Norman Lamb (Lib-Dem North Norfolk) and Richard Bacon (Con. South Norfolk) will form an all-party panel; Equitable are still considering whether to accept last month’s request for a Board member to attend.


Media doom and gloom about the company have left hapless policyholders, many elderly and feeling isolated, much in need of encouragement. Will the Parliamentary Ombudsman have anything for their comfort, and if so, when? What does the current and pending court activity presage? What can Penrose achieve, and is waiting for Penrose a sufficient excuse for paralysis?


These are among the issues expected to arise. David Ward, past-president of Norwich Rotary who will be chairing the meeting, is determined to steer the discussions towards strategies for the future, believing that little is to be gained by raking over past annoyances. His fellow organizer, Nicholas Oglethorpe, a retired solicitor, has been busy for months studying the nuances of the Equitable affair, and expects to make useful contributions to the discussion.

Issued 23 January 2003 – for immediate release.