Press Release on 17 March 2004

DISILLUSIONED PENSIONERS CALL ON MINISTER TO RESIGN

Middle England stirred yesterday in Norwich when a packed meeting at the Norwich Assembly House summoned by two Equitable Life annuitants to explore avenues of redress for their financial losses, called for the resignation of Finance Minister Ruth Kelly.

Echoing the wider fury of pensioners who feel themselves to have been let down by both Government and the financial industry, 200 Equitable annuitants unanimously passed the following resolution.

THIS MEETING

1.         casts doubt on the integrity and ability of the Government, and the pensions and insurance industry as a whole, to be entrusted with people's savings for their old age.

2.         notes and deplores the misleading account of the Penrose Report given to the Commons by the Financial Secretary, and calls on her to resign.

3.         calls on the Government to accept that long-term regulatory failure has been permitted in relation to Equitable Life.

4.         demands that fair compensation be paid to all present and past Equitable Members who have lost money as a result of the failure to regulate effectively.

FFI David Ward Tel 01603 452330

e-mail cringo@onetel.com

_______________________________________________________________________________

Report of the meeting

AN EQUITABLE LIFE? NOT FOR THESE LOSERS

ANNUITANTS LOOK FOR REDRESS

by Michael Drake

(Norfolkman Michael Drake is a freelance journalist
with previous experience of working in the
insurance industry)

Financial Secretary, Ruth Kelly should resign, the government should accept that there has been regulatory failure, and fair compensation should be paid to Equitable Life policyholders.

Doubts were cast on the pensions and insurance industry's ability to be trusted with people's savings as motions were passed unanimously, reflecting that Norfolk people “du different”. Unable to contain their ire at the shambling on of the Equitable Life saga, two local holders of the company's With-Profit Annuity policies shared their desire for real action with fellow Equitable Life Trapped Annuitants (ELTAs) not only in producing their own website (www.elta.org.uk) but in inviting other sufferers to discuss their quandary.

Following Lord Penrose's report and this week's Treasury Select Committee debate, the meeting's chairman David Ward, who ironically used to run the University of East Anglia's national Business Management Game, and Nicholas Oglethorpe, a retired solicitor attracted similarly desperate and frustrated annuitants not only from Norfolk but London, Liverpool, the Midlands and Yorkshire to discuss the 'exploration of avenues of redress for our financial losses, with emphasis on the plight of With-Profit annuitants' And more than 200, some of them former Equitable Life staff, responded at a meeting which filled to overflowing the Music Room in Norwich's Assembly Rooms – built as a citizen's meeting place around the time of the formation of Equitable Life in the mid-18th century.

But it was not sweet music the meeting made. East Anglia probably has a greater proportion of pensioners than any other area of the UK. The depth of feeling locally, augmented from further afield, stems from the fact that with-profit annuitants in the country are trapped – not only in the huge reductions in their pensions as Equitable Life continues to cut annuity payouts, but also not being allowed to transfer their policies.

With an average annuity payment of £6,000 a year for 50,000 annuitants and assuming payouts for 10 years, the total at stake is in the order of £3bn. “That does make us rather cross chaps.” said Nicholas Oglethorpe in a master understatement and commendable reserve. The language at the meeting was rather more forceful – with a depth of feeling at the lack of real help from the company, government, MPs, the Financial Ombudsman Service (FOS) or the Serious Fraud Office (SFO).

So, what of the meeting's theme 'to explore avenues of redress for financial losses with special emphasis on the plight of with-profit annuitants? Addressing the meeting by invitation was Robert Morfee, a partner in Bristol solicitors Clarke Willmott who specialises in financial services disputes. “We invited him to come,” said David Ward, “not because we necessarily agree with his proposals but because he has already won compensation in the High Court for a number of Equitable Life 'sufferers' . He now has the experience to look at other cases as well as at possible collective action.”

Mr Morfee believes that there is an encouraging chance of legal action at an economic rate for with profit annuitants. “Lord Penrose effectively blew the gaffe on Equitable,” he said, “and a basic tenet of insurance is 'good faith' (uberrima fides) on the part of both insurers and insured. The Equitable have not shown uberrima fides. Equitable's Board is duty bound to look after its funds and government similarly has to be careful with taxpayers' money; consequently NEITHER will pay unless they MUST. It is not a question of either party is being wicked in refusing to volunteer compensation.”

In Mr Morfee's opinion primary liability falls on The Equitable because 1) its representatives made unjustified recommendation to buy with-profits annuities and 2) it has broken contractual obligations under the annuity policies.

Individual actions could be taken but Morfee said he would consider taking 'class' action on behalf of a number of annuitants. He was working with ELTA with this in mind. Individual sufferers who wished to pursue the matter should do so by contacting ELTA (website www.elta.org) . It would be necessary to form an association or limited company, have a management committee and fund it. But if, say £500 were expended by each person, this could produce a large compensation figure and would be worth the investment.

His canny East Anglian audience were not so sure. There was strong support for pressure to be put on government to make some compensation. Surely the Government would not want to see the collapse of Equitable or the undermining of life assurance generally, particularly at this time when they are extolling the virtues of saving for a pension to the younger generation.

A parliamentary debate is scheduled for 24 March. The advice by David Ward and Nicholas Oglethorpe was to 'lean on your MPs' and urge them to speak in the debate, to impress on government that the regulatory bodies have failed and that to walk away from responsibility is simply not on.

Both points raised sustained applause from the floor of sixty-, seventy- and eighty-somethings . Robert Morfee's alternative of individual action by with-profit annuitants found little favour. Annuitants had no faith that either the Government or the industry would do anything to help them despite all their fine words. Their real fear was that their pensions would continue to fall and if they do, one group of smart petitioners should not seek to profit at the expense of the remainder. A reasonable point bearing in mind the fundamental idea of insurance is 'spread the losses of the few among the premiums of the many'.

A number asked for more detail of the Norwich meeting's organisation and those coming from a distance wanted more local 'sufferers' groups to be formed. Norman Gomm from Norwich summed it up by saying ,”It was a good meeting and I don't think it could have gone much further. It showed a great depth of collective feeling against our plight and exposed valid points of attack against the government.” Tim Balkwill, Co-ordinator of ELTA said, “ It was very constructive and should encourage people around the country to do something similar.”

The meeting had started with a minute's silence in memory of the victims of the Madrid bombing but at the end Robert Morfee said, “It's time to stop being nice. We must get tough with whoever is in our way.”

Ever in the background was the underlying question - why save for a pension if it is not safe when you've retired? Someone has to pay for mistakes and so far it has been Equitable policyholders. These mistakes were not made by the trapped annuitants. Some form of collective action like that discussed at the Norwich meeting could be the start of decent compensation for the (in)equitable losers.

For further information:
David Ward tel:01603 452330 e-mail:cringo@onetel.com
Nicholas Oglethorpe tel:01603 454210 e-mail:nicholaso@mrsfru.waitrose.com
www.equitablelifemembers.org.uk
www.elta.org.uk