After being contacted by several local residents, I’ve been reading the 50 page summary of the Ombudsman’s report into the Equitable Life scandal – and the summary of the EU report (for which, incidentally, the investigation was led by a Lib Dem MEP – Diana Wallis) and they both make very disturbing reading.
They make an unanswerable case that many Equitable Life policy holders lost money as a direct consequence of regulators failing to keep close enough scrutiny of the company and act on the the risks and problems that they either had, or should have, identified.
The list of the regulatory failures includes:
- Allowing the combination of the roles of Chief Executive and Appointed Actuary between 1991 and 1997
- The failure to adequately scrutinise Equitable Life’s returns and accounting policies and the value of its liabilities from 1990 onwards
- The failure to act on the problems of the differential terminal bonus policy – and the overbonusing of some investors at the expense of others
- The failure to force Equitable Life to create a contingency fund to cover the risk of losing the Hyman case – which challenged Equitable Life policies and, if lost, would leave them open to massive liabilities
- The decision to allow Equitable Life to keep trading after losing the Hyman case
It’s clear that many policy holders have been badly let down by regulators, have suffered financial loss as a result and deserve compensation for the losses caused by the failings of the regulator.
Vince Cable has taken a very strong line on this:
After eight years and 13 reports it’s time for the Government to finally admit that it comprehensively failed to regulate Equitable Life properly.
For years ministers have acted like they were in a castle under siege, hoping that Equitable Life policy holders would give up and go away. Today’s report shows that, rightly, this is not going to happen.
Gordon Brown has overseen a complete and repeated failure of regulation spanning a decade. The outrage expressed by policyholders over this ‘serial regulatory failure’ is entirely justified.
After months of dragging its feet, the Government needs to accept the Ombudsman’s recommendation that ‘wrongs should be remedied’.
If ministers choose to disregard this report, as they have done over tax credits and occupational pensions, it will be the final nail in the coffin for the Ombudsman’s credibility.
These are large sums of money, especially at a time when belts are being tightened. Gordon Brown must now admit fault and apologise to policyholders.
It is critical that the Government now sets out a credible, transparent and independent process to enter into a dialogue with policy holders over compensation.
He’s also written an excellent article on the topic at http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/11/cccable111.xml
Policy holders fully deserve fair compensation after this appalling maladminstration over more than 10 years.
I’d like to thank Martin Tod for featuring our cause for Government compensation. The regime in power has no moral compass and this has been proved over and over by the keeping Equitable Life in deep field for seven long years. Additionally, the Treasury has formed the habit of rejecting Parliament’s own Ombudsman’s recommendations at will. ONLY the Lib Dems, under Vince Cable’s constant vigilance, have been consistent in his support of the cause of treating Equitable Life sufferers fairly. This IS a vote-influencing issue for many. Pensioners have faired very badly under Brown’s stewardship and it’s overdue that the Government, having been found guilty of maladministration of Equitable by Lord Penrose, by the European Parliament and now the PO – must own up and pay up.