Equitable Life is everyone's problem

Ruth Sunderland, The Observer Sunday 7th December, 2008

The government would like you to think that Equitable Life is an ancient scandal whose victims were so well-heeled they barely deserve sympathy, let alone compensation. Don't be fooled. Equitable - or more precisely the government's handling of the affair and its treatment of the policyholders - matters to all of us.

Gordon Brown said a few days ago that the Treasury would respond before Christmas to the Parliamentary Ombudsman's report, published in July. It was full of excoriating criticism of the regulators and recommended the government set up a compensation scheme and apologise. That leaves only days before Parliament breaks up on 18 December - unless, of course, the Treasury continues its strategy of shameless stalling.

I hope Brown sticks to his promise. More than that, I hope he has reached the only right conclusion: to make proper redress to policyholders. Everyone knows that the public purse is under severe strain; full compensation for Equitable could cost £4bn, which will be hard to find. Nonetheless, the government has an obligation to treat victims fairly.

The Ombudsman, Ann Abraham, found catastrophic failure by the regulators over 10 years. Her report only saw the light of day in the summer, after a four-year wait caused in large part by 500 pages of prevarication - er, I mean detailed challenges - by the Treasury, the FSA and the government actuary's department. The longer it drags on, the greater the distress of elderly policyholders.

Equitable's bosses and its policyholders fear there will either be yet more delay or a token, means-tested hardship fund that would only help the poorest. That is not good enough. Not all the pensioners are rich, and even if they were such a wholesale regulatory failure is not made acceptable because its victims are middle class.

The most worrying aspect of this sorry saga, however, is the prospect of the government defying the Ombudsman. Her office conducts independent investigations into the conduct of government departments and agencies, safeguarding the public and democracy itself. One obvious lesson from the credit crunch is that we need better financial regulation. How can we trust the government to achieve that if it disrespects its own watchdog, and effectively condones a decade of egregious failure by its regulators?

Equitable boss urges ministers to pay up or 'look like idiots'

Ruth Sunderland, The Guardian, Monday December 8 2008

The Equitable Life chairman, Vanni Treves, has warned that ministers will look like "complete idiots" and bring the function of the parliamentary ombudsman into disrepute if they do not announce compensation for victims of the failed insurer before Christmas.

Both Treves and policyholder action groups had expected the Treasury to announce its decision on redress early this week. But Whitehall sources have downplayed that suggestion and the Equitable camp now fears that policyholders may face further delays and that any compensation will be severely limited.

Gordon Brown has said there will be a statement to the Commons before MPs leave for the Christmas recess on December 18. Action groups and the company's management, led by Treves, hoped Treasury minister Ian Pearson would make an announcement before his scheduled appearance in front of the public administration select committee this week. Now, however, they fear that Pearson will not throw any new light on the issue when he appears before the committee.

The government was due to respond by the autumn to a damning report from Ann Abraham, the parliamentary ombudsman, which found there had been a decade of failure by regulators, who had been "passive, reactive and complacent". That deadline was extended to Christmas because of the credit crunch, but the ombudsman's report had already taken three years longer to publish than first planned.

Abraham recommended that the government apologise and set up a compensation scheme for victims. Ministers have been reluctant to do so, taking the view that the insurer was the author of its own misfortunes and its policyholders were largely wealthy individuals who ought to come low on the list for help from the public purse.

Treves said: "My belief was that the government's response to the ombudsman would come this week. It will be extraordinary if not. I find it hard to believe that the committee can grill Ian Pearson without there having been a statement first. If he has nothing more to say they will look complete idiots. The Treasury has seen endless drafts and has had plenty of time to consider this.

"A failure to accept the ombudsman's recommendations in this particular case, considering the coruscating criticisms in the report, would be morally indefensible and would bring the whole system into disrepute. The government should establish a commission to pay compensation."

Paul Weir, a spokesman for the Equitable Members Action Group (Emag), said he believed the government would attempt to duck the issue by setting up a means-tested hardship fund to help the poorest victims only. He said Emag would consider launching a judicial review unless ministers offer full redress.

"We want justice, not charity," he said. "They bailed out relatively well-off savers in the banks, so why should it be different for Equitable?"

We need an Equitable outcome for Christmas

Ruth Sunderland, Observer 30th November, 2008

Poor old Equitable Life, which was an early adopter of capital depletion long before the credit crunch, has shelved plans to sell the remainder of its business because of the turmoil. That won't make too much difference to policyholders, since the fund has been in run-off for several years. What would make a difference is compensation: this summer the Parliamentary Ombudsman, Ann Abraham, found the government guilty of serial failures in regulation and recommended that it set up a scheme to compensate victims, but nothing has happened so far.

Further embarrassment for the government may emerge from an investigation into government actuaries' alleged failure to spot the scandal. Equitable has been overshadowed by more shocking failures, but its victims deserve a bail-out just as much as savers in banks, and the government should respect the office of the Ombudsman. So let's have a positive response to her findings in time for Christmas.