02/06/2008 - The FSA and its AGM

On 29th May Lord Adair Turner was confirmed to be the new chairman of the FSA from September, replace Sir Callum McCarthy after five dismal years under his stewardship. The apppointment is welcomed by EMAG.

Read about Adair Turner’s task in this in-depth article in the Sunday Telegraph, by Katerine Griffiths.

Sir Callum will have the unenviable task of chairing the eigth annual public meeting of the FSA at the Q E 2 Conference Centre in Westminster on the morning of Thursday 24th July. Do try to attend. Find out how to register here.
Hopefully, Callum McCarthy will be held to account for the Northern Wreck AND the Equitable, post the publication of PO 2 one week earlier.

02/06/2008 - PO date confirmed

All MPs returned on 2nd June from their break to a letter from Ann Abraham, in which she confirms her report will be laid before the Houses of Parliament in the week commencing 14th July – just a few days before MPs long summer recess which starts on 22nd July. Read her letter.

28/05/2008 - Vanni and Lizzie

The Guardian printed an extensive hagiography on the Society’s chairman, Vanni Treves, on 9th May. Read about his charitable works.

It was heartening to observe that tireless campaigner for Equitable, Liz Kwantes, was honoured with an MBE by the Prince of Wales on May 16th at Buckingham Palace. See http://www.equitablelifemembers.org.uk/

28/05/2008 - Equitable for sale, blah blah

Predictably, a few days before the ELAS AGM, a raft of newspapers published the oft-repeated leaked story that maybe, just maybe, the Pru might buy the remaining £6.6bn WP fund. We have heard all about the prospective sale, the data room of info and the excitement of interest ad nauseum. The likelihood is that no bidder will proceed until PO 2 is in the public domain for fear of a possible new wave of litigation. So it’s unlikely that the Society will be sold in 2008.

28/05/2008 - Equitable’s AGM, 19th May

Held with all the usual razmataz in Westminster, with big screen, staging, autocue and computer logging of questions with roving mikes and a cast of probably two dozen, with the senior litigation partner at solicitors Lovells, Neil Fagan, present - why? And for what? Why are there eight non-execs? What do they do? The total number of member attendees was 70 – less than EMAG has ever had to any of our seven AGMs, without any of the gubbins. Equitable’s should have been in a village hall in Birmingham.

There are about 400,000 people with an ongoing interest in the £6.8bn with-profits fund. Of the 180,000 remaining voting members, approximately 16,000 bothered to vote. About 12% of these voted against the board’s remuneration package. Read the text of the chairman and managing director’s speeches at the AGM.

The Mail on Sunday’s financial editor certainly has a long knife out for MD Charles Thomson’s £1m remuneration. See his articles on May 11th.

And, after the event, pointing out the substantial votes against the board’s remuneration motion.

28/05/2008 - TreasCom grilled the FSA, 6th May

EMAG’s Paul Braithwaite attended the two hour session and observed that Hector Sants acquitted himself well. The most incisive MP was judged to be Labour’s Andy Love who asked such valid questions as:
Q 108: “Mr Sants, is the FSA independent enough from its contributing member firms to be able to deal with this problem adequately?”

Q 118: “One final question if I can, Chairman. Mr Sants, you said earlier on, and I agree very strongly with it, that your role is to look after the consumer. Is it the success of the SEC in the United States that there is a perception there that the authorities look after the little guy against what is happening in some of our city institutions, and should not the FSA be concentrating more on looking after the little guy in order that we achieve more success in this area?”

Find out the answers at the transcipt (towards the end).

03/04/2008 - ELAS 2007 figures

On 27th March, Equitable Life published its preliminary 2007 financial report. It was much the same story as before. A nominal amount invested equities. The with-profits fund in now down to £6.6bn (run down from £26bn in 2000). The bonus, non-guaranteed, remains the same at 5%.

Perhaps the most interesting para was this one:
“During 2008 we have been notified of 78 legal claims lodged in various regional courts in Germany. We will examine these claims in due course and consider them on their individual merits. As usual, we will resist any attempts by policyholders to obtain an unfair advantage at the expense of all other with-profits policyholders.“

The news was that there was no news. Trailed many times and oft that the remainder would be sold off (and that there’s a queue of bidders) has evaporated into the ether. It’s STILL all for sale. Did not Vanni and Charles promise in November 2006, when they were covered in opprobrium over their disastrous £50m waste on failed litigation, that there was no point in demanding that they go because they’d be gone by the end of 2007? See more deja-vu reporting of the recycled story.

03/04/2008 - The FSA report on itself

Surprisingly, the internal report by the FSA into supervision of the Northern Wreck, published on 26th March, was particularly self-critical. Download the 12-page executive summary and press release.

These were the four key failings identified in the supervision of the FSA:

1. A lack of sufficient supervisory engagement with the firm, in particular the failure of the supervisory team to follow up rigorously with the management of the firm on the business model vulnerability arising from changing market conditions.
2. A lack of adequate oversight and review by FSA line management of the quality, intensity and rigour of the firm's supervision.
3. Inadequate specific resource directly supervising the firm.
4. A lack of intensity by the FSA in ensuring that all available risk information was properly utilised to inform its supervisory actions.

It must be enormously helpful to EMAG’s cause of claimed maladministration by the FSA to be able to demonstrate that, six years after the Equitable’s problems became public, the FSA continued to fail investors in such chronic fashion. The FSA simply won’t be able to say that “lessons had been learned”. Hopefully, PO 2 will highlight the parallels between Equitable Life regulation and Northern Rock. See just some of the press coverage.

25/02/2008 - In the House of Lords

From Hansard 18th Feb 2008, Column 26, 3:56pm
Tory Lord de Mauley:
“My Lords, I thank the Minister for repeating this Statement on Northern Rock. I wish that I could say that I welcomed it, but I do not. I am sorry for the Minister for having to read it, as, indeed, I am sorry for the Chancellor, who is out of his depth and a puppet for a failed Prime Minister—a Prime Minister who created the conditions for the failure of Northern Rock in the first place.

Can the Minister confirm that the Bill gives the Government power to alter any Act of Parliament applying to banks in the United Kingdom by order? Can he confirm that it gives the power to backdate regulations applying to banks and building societies? Why has the Treasury flung so much money at this company when with, say, Equitable Life, it slunk past on the other side of the road? What is the difference between one financial institution with an over-ambitious business plan and another?”

Read more.

25/02/2008 - Nice stuff about Dr Cable

Vince Cable has been the stand-out politician who has had a clear grasp of Northern Rock all along. Incredibly, the chairman of the FSA, Callum McCarthy tried to shut him up in September and accused him of scaremongering.

Cable has been the subject of extensive press praise, in particular in the Guardian, with as very amusing Parthian Shot: “The government does seem to have an extraordinary search engine, which finds banana skins to fall on."

22/07/2008 - EQUI demands

The EQUI report of 19th June 2007 has yet to receive any reply from the UK Government, which shows two-fingered contempt towards Brussels. The president of the Petitions Committee, Marcin Libicski, has invited Ann Abraham to present her Report in Brussels on October6th/7th

The chair of EQUI, Mairead McGuinness, has spoken up for European victims, pledging to press for action

22/07/2008 - PASC and TreasCom

Dr Tony Wright, the admirable chair of the select committee on Public Administration (PASC), the body to which the PO reports, has announced he is to stand down at the next election due to serious health problems.

The PASC met Ann Abraham and her team on the morning the report became public. There will be a series of PASC meetings to review the Equitable report. The first will be with Ann Abraham, probably in w/c 13th October. It is to be hoped that Dr Wright, who is passionate about the constiturtional importance of the office of the PO will remain at the helm on this report and Parliament’s response, as he did so ably for the occupational pensioners.

Astonishingly, the chairman of the Treasury select committee is expressing doubts as to whether his committee will look at the PO’s report, arguing that it relates to a regime that was replaced more than six years ago. It seems a more likely explanation is that John McFall is protecting the Government from further financial embarrassment. Hopefully, the Tories on the Committee, in particular, Philip Dunne, can persuade him.

22/07/2008 - The Tories get off the fence

Finally, on July 16th George Osborne saw political mileage in supporting Equitable’s victims and, for the first time, undertook to set up a payment sheme if the Government doesn’t.
Here’s the exact wording:

"We Conservatives forced the government to allow the Parliamentary Ombudsman to investigate the regulation of Equitable Life and we welcome her report. The Ombudsman rightly highlights regulatory failings, including those between 1998 and 2001, when Gordon Brown and the Treasury had responsibility for this area. He cannot escape the blame for what happened on his watch.

We're glad that the report accepts the principle that there should be payments to those who lost out. The job now is to assess how much those payments should be and to whom they should be paid. We have to be straight with policyholders. As the Ombudsman makes clear, policyholders cannot expect to receive payments for the full losses suffered and any payment scheme must be consistent with sound public finances.

It is up to the government now to admit its responsibility, issue the apology that the Ombudsman demands and create the payment scheme. If it doesn’t, we will."?

22/07/2008 - Equitable for sale (yawn)

Yet more non-stories that the Society’s remaining 270,000 members in the £6.5bn with-profits fund may be subject to bids from Swiss Re or Prudential.

Even on Charles Thomnson’s busiest of days, 16th July, he was apparently working on preparing "the data room".

22/07/2008 - Accountants Joint Disciplinary Scheme (JDS) rumbles on

The hearings, held in camera last year, have still not led to a published report, expected sometime later this year. Theoretically, the auditors Ernst & Young could recive an eye-watering fine for failing to “qualify” the Equitable’s accounts for 1999 and 2000. E & Y were again represented by the very impressive silk, Mark Hapgood QC, who performed so well for them in Court 76 that they got off Scott-free there. The accountancy body and not the victims would be recipients of any fine. Another fine example of British professions and justice!

11/07/2008 - The chair of EQUI demands compensation

Irish MEP Mairaid McGuinness is quoted in the Daily Telegraph 11th July demanding that Equitable Life sufferers must be compensated.

“The European Parliament will push for compensation to be paid to Equitable Life policyholders, regardless of any recommendations made by a new report slamming the Government for its role in the demise of the mutual insurer………………..

MEP Mairead McGuinness said:
"In any civilised society, or democracy, where the regulator has failed, people deserve to be compensated for the losses incurred. It has been appalling."…………

27/06/2008 - EMAG at the EU Parliament, again

On Wed 25th June EMAG was invited to present to MEPs on the EU Petitions Committee an update on progress (or not!) in the UK. Read the EMAG speech, delivered by EMAG petitioner and director, Tom Lake. The Committee will be sending the EU President a letter updating him on the lack of response from the UK and detailing the EC’s progress on the 47 EQUI recommendations.

Afterwards, EMAG directors Paul Braithwaite, Tom Lake and Leslie Seymour had lunch with MEP Sharon Bowles, who is one of the drivers on framing the next generation of pan-European reguation known as Solvency 2.

03/04/2008 - No action at the ECJ

An EMAG member enquired of rapporteur Diana Wallis MEP why the Commission hasn’t instigated proceedings in the European Courts of Justice: The reply was:

”The European Parliament does not have the power to take the UK government to the Court of Justice. The EC and EU Treaties make it a law-making body, not a law-enforcing body. The Commission is empowered to take Member States to court for not applying directives. However, the Commission's practice for the last fifty years has been to take them to court only when the violation is still continuing (as opposed to past).
The Commission claimed before the European Parliament that the violation was only in the past, and that therefore they were powerless.”

Diana Wallis had a letter published in The Independent pointing out that her EQUI report in June 2007 had many of the same findings as the recent FSA’s own.

09/02/2008 - Alistair Darling’s letter

The EU President wrote a stern letter to Gordon Brown on 5th December asking for a response to the EQUI Report and the 47 recommendations contained therein.

Gordon Brown passed it to The Treasury and eventually the Chancellor, Alistair Darling, sent a reply letter with a face date of 11th January- though not available to MEPs on the Petitions Committee on January 23rd.

EMAG has seen this letter and its content is totally anodyne and unhelpful in the extreme. Unfortunately and unhelpfully, the Treasury has marked it "Confidential". How typical. EMAG has made a formal request to the EU Parliament to release the document but that needs the UK's consent. This Government doesn't know the meaning of the word "transparency".

09/02/2008 - Transcripts of the Petitions Committee

EMAG has had the MEP speeches at the EU Parliament Petitions Committee hearing on EQUI on 23rd January transcribed. Read what MEPs Diana Wallis, Sir Robert Atkins, Mairead McGuinness and Michael Cashman had to say.

25/01/2008 - EU Petitions Committee revisits ELAS

The Committee, which was the progenitor of the EQUI Temporary Committee of Inquiry, revisited the issue in the light of the UK authorities contemptuous failure to respond in seven months to the report. Paul Braithwaite of EMAG gave a short update, followed by responses from MEPs from several parties: Diana Wallis, Sir Robert Atkins, Mairead McGuinness and Michael Cashman. Please, DO take the time to read the text of EMAG/Paul Braithwaite’s presentation.

Perhaps the most suprising comment was in winding up the debate, loyalist Labour Petitions Committee deputy chairman (and personal pal of Gordon Brown), Michael Cashman MEP said this:
"I'm a member of the British Labour Party, I'm a member of the National Executive of the British Labour Party but I make the same demands of a Labour Government as I do of any other Government and that is why I support fully the fact that we should have an early meeting and seek this concrete proposal and agreement that the Parliamentary Ombudsman's recommendations will be implemented. That seems to be the fair and just resolution."

EMAG intends to publish verbatim transcripts of the MEPs and the Commissions speeches. See press coverage.

11/01/2008 - EU President’s letter to Gordon

On 9th January the full text of the EU President’s letter to Gordon Brown (dated 5th December, 2007) became available. Read the letter.

Despite the stern words, Gordon Brown had not replied as on 9th January but he had passed it to The Treasury, who are quoted as saying: “….it was unable to say very much until the completion of the?parliamentary ombudsman's report” Not that The Treasury has said ANYTHING at all on the subject! Read the Guardian’s report.

08/01/2008 - Justice for OPs, finally

On 17th December Gordon Brown finally capitulated, under pressure from Secretary of State for the DWP, Peter Hain, and Frank Field MP, to honour the recommendations of the Andrew Young report. His recommendation was that the victims should receive the same compensation as would have been forthcoming under the legislation that set up the Pensions Protection Fund (PPF). Extraordinarily, as late as mid-December The Treasury was still resisting.

The day before this volte face there was an excellent article in The Observer by Jill Insley describing the plight of victims of both the OP and ELAS scandals. This quote, for example, from aggrieved ELAS pensioner Gabrielle de Pauw:

“'What makes me furious is the attitude of the government, that can within a few days bale out Northern Rock to the tune of an extreme amount of billions (and I bet us taxpayers don't get it back, despite what Alistair Darling says), but happily put the boot into people like the Equitable victims and those poor souls whose occupational pensions have evaporated when their firms went bust.”

Read More

08/01/2008 - Liz Kwantes, MBE

Some pleasing news to start the year is that Liz Kwantes, a stalwart campaigner for ELAS and OP sufferers, was awarded a “gong” in the New Year’s Honours List. EMAG was amongst those who had proposed her.

13/12/2007 - Angry EU reaction to UK’s contempt

The President of the European Parliament, Hans-Gert Pöttering, wrote to Gordon Brown on 5 December 2007 asking the Prime Minister to "ensure that the authority of the Parliament and of its right of inquiry………… are not prejudiced by the lasting lack of formal response by the British Government".

On 11th December the EQUI rapporteur, Diana Wallis MEP, issued a statement that the UK’s lack of response is totally unacceptable:

Speaking in response to the UK Parliamentary Ombudsman's further postponing of the publication of her report into Equitable Life, and the British government's continued refusal to respond to the European Parliament's resolution on the issue:

"It is both immoral and illegal for the government to leave so many Equitable Life policyholders without a remedy. I cannot accept the fact that the European Parliament faces the prospect of waiting more than a year between its report on the crisis at Equitable Life, and any formal response by the government most concerned by it.

The European Commission provided a clear and detailed response to us earlier this autumn, but so far there is not even an acknowledgment from the British government.

Such a stance is all the more surprising following the prompt rescuing of Northern Rock. I will make sure the Petitions Committee of the European Parliament, to whom several Equitable policyholders came for redress in the first place, takes this matter up once again."

See the European Commission’s response. Read coverage in Money Marketing 11th December 2007