“E 7” press release: 29th October, 2002

Last Updated: Tuesday, October 29, 2002 06:33 PM

“E 7” press release: 29th October, 2002

Equitable Life’s policyholder groups accuse Treasury of cover-up and call for a comprehensive study by the Parliamentary Ombudsman with a view to Government compensation for a decade of regulatory failure.


Equitable Life policyholder groups are united in their demand for action on Government compensation for serial regulatory failure. They accuse the Treasury of orchestrating a cover-up, with delays and deliberate attempts to “ring fence” the perceived regulatory problem to a brief period to distract from its own extensive culpability for regulatory failure pre-dating 1999. 


The new group of groups, calling itself E 7, is pleading for the new Parliamentary Ombudsman, Ann Abraham,  immediately to broaden to a comprehensive study the P.O.’s current modest pilot investigation.  As things stand, just one case relating to 1999/2000 is being evaluated but E 7 wants the P.O.’s office to commit now to addressing the other 250 cases of claimed maladministration already lodged by MPs, going back to 1994 and beyond.


The E 7 group’s spokesman, Paul Braithwaite, said:


“America has shown us how huge financial scandals can and should be addressed – swiftly, independently and honestly. Equitable policyholders are fed up with being fobbed off with a shabby establishment cover-up.”


 “The Treasury has played Lord Nelson.  Cynically, a year ago the minister Ruth Kelly knocked the Equitable Life neatly into the long grass by announcing the far from independent Penrose Inquiry, with a totally toothless remit. It has since been used by the Treasury and also, disgracefully, the Treasury Select Committee, as an excuse to do nothing. It’s unlikely that MPs or policyholders will see any version of Lord Penrose’s report before 2004.”


Today, in an impressive display of unanimity, a dozen committee members from seven independent Equitable Life action groups and 15 sympathetic MPs from all parties assembled to meet the press outside The Commons. The demand for action now by the P.O. is also being backed by the Consumers' Association, The Equitable Life, Age Concern, NAPF and Arthritis Care.


Representatives of the E7 group, each holding an alarm clock aloft, surrounded a cake with the words: “Parliamentary Ombudsman, please HELP!”.  It was an anniversary reminder that both the P. O.’s office and Lord Penrose have been working on reports for a year with no visible progress. It is nearly two years since Equitable ignominiously closed to new business. In that time the million policyholders who have suffered on-going uncertainty and anguish have been stuffed with write-downs to their policies of more than £3 billions - about one third of each policy’s value. E 7 claims that this was not related to the stockmarket crash – but down to over-distribution of bonuses that went endorsed and unchecked by regulators throughout the 1990s whilst the Society continued pyramid selling to unsuspecting policyholders.


Paul Braithwaite added:


“Equitable Life is at the epicentre of the crisis of confidence in pensions. There’s a very important principle at stake: we’re entitled to believe that if there is regulatory failure, then it will be admitted and we will be compensated – otherwise, our trust is gravely misplaced and undermined.”


 “No amount of fine words about the future from the breathtakingly expensive FSA will overcome the fact that a million voters who thought they had made prudent pension self-provision are convinced that regulation has failed them. The Treasury is shirking its responsibility to own up and pay up.”


Further information: www.emag.org.uk or www.equitablelifemembers.org.uk


Paul Braithwaite (EMAG) 020.7267.5938

Mobile: 07973.537.480 emagpr@yahoo.com


Liz Kwantes (ELMHG) 01628.525.130 liz@kwantes.com


Miranda  Watson (Consumers’ Association) 020.7770.7262 miranda.watson@which.co.uk

Editor’s notes:

E 7, a federation of independent action groups, was represented by:

EMAG – Paul Braithwaite, ELMHG – Liz Kwantes, EPHAG – Bob Widdess, ELJAG – Chris Harlow, Income Drawdowns – Geoff Glover, Annuitants – Nicholas Oglethorpe and Internationals – Leslie Seymour.


One year anniversary of the P.O.’s letter to MPs:

Exactly one year ago the Parliamentary Ombudsman, Sir Michael Buckley, wrote to all MPs saying that he:  “…..had decided to await the outcome of the inquiry (Penrose) before considering further whether I might usefully intervene”, whilst announcing a pilot investigation of one representative complaint into maladministration by the FSA during the narrow period covered by the Baird Report. One year on and there’s no prospect in sight of even that modest report. A cause for concern is that the P.O. himself has already departed and his deputy, Alan Watson, will soon be retiring.  It is therefore timely for E 7 to petition the new P.O, Ann Abraham, to plead for the immediate commissioning of a full-blown study. Justice delayed is justice denied.


Only the Parliamentary Ombudsman is credible as having both the true independence to scrutinise regulatory failure and to propose redress – which is explicitly not within Lord Penrose’s power. It is rumoured that the Treasury has not been co-operating with the P. O.’s office.  The Treasury refused MPs on the Treasury Select Committee briefing papers and minutes from 1998, so how can MPs or policyholders be confident that the Penrose Inquiry report, which is to Treasury ministers, will not be similarly blue-pencilled? Barlow Clowes is a precedent: the Treasury denied wrong-doing but was found by the P.O.  to be culpable and compensation was paid.


The interim report of the Treasury Select Committee in March 2001 concluded, prima facie, that serial regulatory failure had occurred dating back to 1994.  That report was 20 months ago. Despite this, the Treasury has been successful in confining the period of scrutiny to the 23 month period up to December 2000.  E 7 believes that the Treasury itself must be put under the spotlight. Maladministration should be investigated back to 1994 (arguably earlier) and forward to date. 


When the Equitable Life was closed to new business the Treasury called upon the FSA to study its own supervision since the FSA’s inception in January 1999 – resulting in the highly critical Baird Report.  This swift move very neatly erected a fire-wall from the earlier, largely unscrutinised, period of embarrassment to the Treasury when it had itself direct regulatory responsibility pre 1999.