25/08/2010 - The Commission's TOR
In the light of the PO's letter to MPs, the Commission's terms of reference, which are completely grounded on Chadwick's report, should be torn up. Just look at point 3 and then point 10, on having regard to "disproportionate impact":
http://www.hm-treasury.gov.uk/d/equitablelife_commission_tor.pdf
25/08/2010 - Treasury deliberate distortions
HM Treasury is sending out a grossly misleading "cookie cutter" letter to interested parties:
The letter starts with a falsehood: "Announcements made on the 22nd July demonstrate a clear commitment to meeting the pledge to honour the Ombudsman's recommendations as quickly as possible."
But the announcement to the Commons did not indicate anything remotely like honouring the Ombudsman's recommendations. The Statement flew a kite for paying about a it used Chadwick's report to justify a derisory proposed figure of about £500 million.
A further example: "..Sir John has proposed, consistent with the Ombudsman's findings, that relative loss should be capped at the absolute loss. This produces a figure of £2.3 - 3 billion."
The PO has never ever said or implied any such thing.
Similarly, a grossly misleading paragraph from Mark Hoban's actual Satement to the Commons is being picked out and sent to all MPs:
"Sir John and the Equitable members action group—EMAG—are in agreement that not all policyholders would have decided against investing in Equitable Life had its regulatory returns not been subject to maladministration. There is scope for debate about by how much investment would have been reduced. Sir John advises that the majority of policyholders would have invested in Equitable Life irrespective of maladministration. He therefore proposes that policyholders should receive only 20% to 25% of the capped figure that I mentioned. I know that some stakeholders will dispute this proportion. This results in a figure of £475 million to £650 million."
Let's be clear. EMAG has NOT agreed with Chadwick on anything. The PO dismissed the idea of compensation based on "absolute loss", which is Chadwick's starting point for his incredible discounting. There is NO logic as to why there should be ANY discounting of "absolute loss", even if it had it been the PO's recommended basis for compensation - which it is not.
25/08/2010 - The Treasury's timing?
It's a scandal that the Treasury did not set aside the "Chadwick Process" when the coalition made its promise to honour the PO in May. It seems plausible that the Treasury's motive was cynically to use the obsolete Chadwick report to devastate victims' expectations. WHY was Chadwick given seven extra weeks in which to report, despite no changes whatsoever to his remit, such that it was published on almost the last day the Commons sat in July?
Why are we being pressed for alternative "robust evidence-based" ideas to be rush-submitted to the Treasury before the end of August when all of EMAG's repeated written requests for the evidence have been ignored (to 25 August)?
Why is the Commons debate just a week after the MPs return from holidays? If it looks like a plot to stitch us up and smells like one, it probably is one.
25/08/2010 - "Relative loss" and the PO's intent
Right now, THE most important concept in the whole of the PO report, which the coalition and 380 individual MPs have promised to uphold, is "relative loss". The Ombudsman proposed it as her basis for compensating for injustices she found. All of the slicing and dicing by Sir John Chadwick are his invention – words put by him into Ann Abraham's mouth or just his sophistry which should be summarily thrown away.
Ann Abraham made it very clear in her letter to him on 20 August 2009 – and she substantiated it at length in her detailed letter of 27 November 2009 - that:
"In essence, the view expressed in my report is that, absent the serial maladministration I had determined from July 1991 onwards, no reasonable investor would have joined or remained with Equitable Life throughout that period - going instead to another life insurance company."
Read the correspondence between Ann Abrahams and Sir John Chadwick.
That says it all - bang to rights! Chadwick is irrelevant IF Parliament intends to honour the PO's recommendations.
23/08/2010 - Disingenuous Treasury?
Hopefully everyone reading this EMAG website will have digested the importance of the content of the blistering letter from the Parliamentary Ombudsman, ANN Abraham, to ALL MPs, sent on 26th July. Extraordinarily, we're hearing lots of anecdotal evidence that many MPs have not. Please, do bring it to your own MPs attention. Print off the letter and include it in any letter you may send them.
You'll be open-jawed at the brass neck of the Treasury in the way that they understate the Parliamentary Ombudsman's reservations about Chadwick's report. Read this letter sent by the Treasury minister, Mark Hoban, to a coalition MP in August.
It's as if the Treasury is airbrushing the PO out of the equation, because her report doesn't fit the Treasury's unchanged and ruthless agenda. In Roman times "to decimate" was to reduce by one in ten. The Treasury have reversed that to educe our compensation by NINE tenths. It proposes to use Chadwick's report and the parlous economy to pay us out, after a decade waiting, just 10% of our losses, confirmed to be £4.8 billions with just £400 - £500m – or just £300 or so per policyholder. Are you going to let the Treasury get away with it?
29/07/2010 - An excellent Equitable debate by MPs
It seems like long ago, but at lunchtime on Tuesday 20 July, immediately after four EMAG directors met Mark Hoban in the Treasury the was a Westminster Hall debate. It was sponsored by the new 31-year-old MP for Abingdon, Nicola Blackwood MP. With extensive briefing from EMAG we think you'll agree, she did wonderfully well. Read her speech in Hansard
29/07/2010 - The new Commission's questionable terms of reference
The new three-man commission of Brian Pomeroy, John Howard and John Tattersall only gets to divvy up a sum to be set in the Autumn Spending Review (20 October). Its now proved-to-be toxic terms of reference include:
- The Commission will have regard to the work undertaken by Sir John Chadwick on the methodology for calculating relative loss and base its allocation to policyholders on the relative loss figures provided to HM Treasury by Towers Watson.
- In the interests of speed and of the public purse, the Commission should ensure that it does not unnecessarily replicate existing analysis determining relative loss.
- It will have regard to, but need not be bound by findings on disproportionate impact carried out by Sir John Chadwick.
Reminder - The Coalition's promise is to:
"implement the Parliamentary and Health Ombudsman's recommendation to make fair and
transparent payments to Equitable Life policyholders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure."
So, having regard to 'disproportionate impact' is directly contrary to the Coalition's commitment. Read the Commission's TORs.
29/07/2010 - Chadwick's actuarial alchemy
The way that Sir John Chadwick manages to trickle down admitted comparative losses of £4.8 billions to a proposed payout of £400 million in compensation is masterful – but incomprehensive. See P 7 (of 10) in actuaries Towers Watsons' quantification of Chadwick's methodology
29/07/2010 - The Statement to the Commons
Mark Hoban, Financial Secretary to the Treasury, made his Statement to the House at lunchtime on Thursday 22 July - almost the last day of MPs' term. The Treasury sprung an ambush on us. The Chadwick report, having been mysteriously delayed for seven weeks for no good reason, was published along with ancilliary annexes, running to 2,500 pages. Also a new Commission was announced, to devise a scheme and distribute a sum to be announced by the Coalition on 20 October.
Notwithstanding the deplorable content of his Statement, Hoban did preface it with an unequivocal commitment on the Coalition's behalf to make fair payments to Equitable's policyholders for their relative loss as a consequence of regulatory failure. This is incompatible with his Chadwick-based quantification articulated to the House.
Read Hansard
EMAG will be issuing guidance asap to explain the actuarial alchemy of Chadwick's entirely hypothetical model of a properly regulated Equitable in the 1990s and such salami-slicing terms as 'external relative loss'. It's like a modern movie with marvelous computer generated images of something that has no reality!
Read some of the very many supportive press articles on July 23 – 25
29/07/2010 - The PO reject's Chadwick outright!
Monday 26 July was a good day for Equitable victims: The PO, Ann Abraham, wrote a stonking put down on the inappropriateness of Chadwick's report to honouring her findings.
You only have to read Annex H of Chadwick's report to see what contempt the 'black letter' lawyer displays in ultra-partisan fashion against the PO's findings. Chadwick completely ignores that the PO's modus operandi is one of dispensing 'natural justice'. She is the independent arbiter for Parliament of whether maladministration warranting compensation has occurred. Chadwick was not independent. He was the partisan hired gun for the Treasury, whose task was to come up with a limited hardship scheme only for findings the Labour government had accepted. It was certainly not his prerogative to re-try the case, as he has.
Read Ann Abraham's letter to all MPs
See Press headlines.
And the full press coverage
And EMAG's press release.
09/07/2010 - EMAG's 11th hour lobbying
EMAG asked its members to explain to their MPs why building on Chadwick is not appropriate and why the validation of our true comparative losses should be established, as envisaged by the PO, by the new Commission. At present it looks like the Treasury will be the body that tells us we really lost much less than previously claimed. Well, they would say that...
Read EMAG's letter sent to all MPs on 8 July explaining why 'The Chadwick Process' should be sidelined.
09/07/2010 - Ominous silence from minister
EMAG has written two recent letters to minister, Mark Hoban. The one on 25 June was constructive but asked for specific answers to WHAT other building blocks are being considered, asked again for the 'Head A' Calculations. Where answer was there none, a follow up on 5 July asked for written responses to both letters (15 and 25 June) a meeting by 9 July and confidential sight of the Chadwick Report which will be public within one week. No response. What does this mean? It is not the transparency promised.
Read EMAG's constructive letter of 25 June.
17/06/2010 - E & Y let off lightly
On 4 June the accountancy profession’s appeal panel announced its findings on the case against E & Y. The result was a derisory fine of £500,000. The only upside to this is that it denies Sir John Chadwick the prerogative to slice his recommendations for the negligence of the auditors. E & Y are now subject to another investigation over its role in Lehman Brothers. No doubt that will end in another whitewash in a couple of years time,too.
Read the highly critical press.
17/06/2010 - Press backing for EMAG
The EMAG board met on 9 June and concluded that we should alert the press and our members to the ambush which we believe the Treasury is plotting.
EMAG circulated a press release.
Read the newspaper coverage.
17/06/2010 - "Robust" exchanges with minister Mark Hoban
Four EMAG directors met Mark Hoban, first secretary to the Treasury, on the eve of the Queens Speech. It emerged soon after that it is the government's current intention to publish the Chadwick Report, with unchanged terms of reference set by Labour to minimise payouts, simultaneously in mid-July with a figure for the quantum of compensation and the names on the independent commission. The commission, contrary to the PO’s intentions, is currently NOT to going to be remitted to establish independently the true measure of comparative loss. This just looks like more of the same dirty tricks by the Treasury and EMAG has pointed this out to Mark Hoban in writing and asked him to pull back and reconsider.
Read the exchange, particularly the most recent at the end of the file.
04/06/2010 - Breakthrough!
Post the general election, on 17 May, EMAG wrote to the new financial secretary to the Treasury, Mark Hoban, suggesting that enabling legislation should be in the Queen's Speech. Four EMAG directors met him in the Treasury on 24 May. The next day, the Queen's Speech including a bill to facilitate swift compensation was included. Promises kept. Win, win! Read the national press coverage.
04/06/2010 - Whither Chadwick?
For many months the report of Sir John Chadwick to his Treasury masters was promised to be delivered in May 2010. Two weeks after the election Sir John Chadwick asked for, and was granted a six-week extension, thus making his study 18-months long – designed to delay or what? A cynic might think that Sir John wants the extra time to customise his report to please the new administration. The fact remains that his terms of reference are unchanged. He has been tasked to advise on five specific questions about how to cut back already limited charity payments by a number of dubious devices and to identify those who have suffered “disproportionate impact”. That is not compensation for injustices found. His remit is blatantly incongruent and now obsolete when compared to the coalition government's new commitment to:
“ …… implement the Parliamentary and Health Ombudsman's recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure."
Read Treasury-appointed actuaries Towers Watson's letter to Sir John, dated 25 May
16/04/2010 - A massive EMAG mailshot
In w/c 12 April, more than 350,000 letters from EMAG were delivered to old Equitable Life policyholders who have not so far ever joined EMAG. The letter encouraged the recipient to take an active political interest and ask their local aspiring MPs what is their commitment to compensating Equitable Life victims. This should serve to increase pressure on all candidates. EMAG is, of course, politically neutral.
Read some of the weasel words reasons given for NOT signing EMAG’s Pledge
16/04/2010 - Two fantastic triumphs for EMAG
EMAG started working on the opposition political parties at the autumn conferences, seeking manifesto commitments to honouring the PO’s actual recommendations for compensation. Those efforts were rewarded in w/c 12 April when both the Conservatives and the Lib Dems did include Equitable. This is a terrific achievement which virtually guarantees that “The Chadwick Process” will not be the limiting factor.
Page 18 of the Liberal Democrat Party manifesto:
"We will make pensions and benefits fair and reward savers by: Meeting the government’s obligations towards Equitable Life policyholders who have suffered loss. We will set up a swift, simple, transparent and fair payment scheme."
Page 12 of the Conservative Party manifesto:
"We must not let the mis-selling of financial products put people off saving. We will implement the Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policyholders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure."
06/04/2010 - Now both Tories and the Lib Dems endorse compensation, administered independent of Government
First, on 11 March, after meeting EMAG, Vince Cable wrote a letter encouraging all Lib Dem candidates to sign EMAG’s Pledge.
After a meeting between three EMAG directors and Conservative shadow Treasury minister Mark Hoban and policy supremo Oliver Letwin, a similar most welcome unequivocal firm commitment letter was sent to EMAG by Mark Hoban on 2 April.
This new letter was also reported in the Mail on Sunday, 4 April.06/04/2010 - Why 'The Chadwick Process' just won’t do
Since mid-March EMAG has succeeded in convincing the opposition parties that the Government’s fudge, 'The Chadwick Process', is discredited.
The debate by MPs in the Commons on 16 March caused EMAG such concern that we wrote letter immediately to every single MP explaining exactly what we believe is wrong with 'The Chadwick Process'.
The central defect is that the remit is a distortion of the PO’s recommendations. Sir John’s brief is severely constrained so as to salami-slice proposed charity payments to a minimum and only to those 'disproportionately impacted' – not the justice intended by the PO. His final Report, due after the general election, is merely advice to a scheme that this Government determined should be designed by the Treasury – one of the regulators found to be maladministrative by the PO! The final straw tocause EMAG to break off working cooperatively with Sir John was our careful reading of his third Interim Report (4 March), which revealed his true colours and how much in thrall he is to the Treasury.
01/04/2010 - Solvency 2 will hurt Equitable
The new European regulatory from 2012 regime, known as Solvency 2, as applied to closed with-profits funds will require greater depth in capital reserving, meaning that investment in equities will be even more limited than in the past. The new Chief Executive of Equitable has flagged up that this will be an increasing problem for the society and it is looking at ways of ameliorating. See the Daily Telegraph.
01/04/2010 - EMAG is not alone
EMAG publicly denounced 'The Chadwick Process' as a charade on 15 March. We stated we would disengage
and not make any further submissions. We had concluded, after months of co-operation in good faith, after a
very careful analysis of Sir John’s third Interim Report (4 March), that he was completely in thrall to the
Treasury, his paymasters, and taking no heed of EMAG and others’ representations. It was with regret, that
we observed the direction of travel revealed was a reversal on issues such as the 'flexible' approach, the
toxic Head B weasel and actuaries Towers Watson’s refusal to take the PO Report as a whole, per the PO’s own explanatory letter of 20 August 2009
This week has, however, seen two outstanding individual submissions to Sir John. They have each made
their submissions independent of EMAG but their content is blisteringly critical of the third Interim
Report. Read, on Liz Kwantes’ website, 12 page
submission from Dr Andrew Goudie, of Liverpool University.
And an excellent 15 pages, well worth
reading, from Michael Josephs.
EMAG understands that Equitable Life too will soon be making a critical submission.
23/03/2010 - The Commons debate
The debate lasted nearly threre hours with many fine contributions. That from Barry Gardiner (Labour) was notably honourable. – similarly Kelvin Hopkins. Vince Cable spoke up for EMAG’s proposed compassionate interim payments on account to locked-in with-profits annuitants. But both Labour and Tories rejected the idea. The only revelations from stonewalling minister Liam Byrne was that Estates are definately included and 'disproportionately impacted' certainly includes with-profits annuitants and some late joiners.
The Tories were represented by Mark Hoban and Greg Hands. Mr Hoban seemed preoccupied only with speeding the process, with little to say about fairness. At least the Tory motion quite correctly called on the Government: '...to set a clear timetable for implementing the Ombudsman's recommendations and remedying the injustice suffered by policyholders.'
Read Paul Braithwaite’s first hand report.
And read the full transcript in Hansard.
See how 527 MPs voted. Did yours?
Once again, it was notable that , whilst 50 or so MPs participated, when the division bell went at 7.00pm nearly 500 more MPs came out of the woodwork and obeyed the party whips.
Read IFAOnline David Worsfold’s comprehensive write-up.
Subsequent to the debate EMAG wrote a letter immediately to ALL MPs pointing out the need to rethink how 'The Chadwick Process' is treated after the election.
23/03/2010 - The Commons debate: EMAG briefings to MPs
The Tories only announced that they were dedicating one of their opposition day debates to 'The Government’s handling of Equitable Life' on Thursday afternoon (11 March) in advance of the following Tuesday. That gave EMAG just a weekend to prepare TWO informative briefing papers to the 152 MPs on the all-party group. These were circulated before the actual wording of the motion was revealed, less than 24 hours before the debate.
The first, prepared by Paul Braithwaite and Nicolas Bellord addressed the ten years of political prevarication. This,followed by a description of the downwardly spiralling progression of 'The Chadwick Process' as revealed in the third Interim Report.
Read The first briefing paper.
The second paper is an incisive damning explanation by EMAG’s Colin Slater defining the variances between the PO Report’s recommentations and Sir John’s third Report, which led to EMAG summarily breaking off relations after months of constructive engagement by EMAG, made in good faith.
Read The second briefing paper.
10/03/2010 - Chadwick’s third interim report
On 4 March Sir John published his third interim report. It is similarly convoluted to the confusing second report which was published on 16 December, 2009.
Read EMAG highly critical Executive Summary of our response to that second report.
This third report calls for yet more angels to dance on heads of pins, with further submissions to be made by 9 April, prior to publication of his final report some time in May, seemingly inevitably AFTER the general election.
Download the 109 page third interim report as a PDF.
Or read it online.
Read or download the full 86 pages of EMAG’s written exchanges with Sir John.
EMAG’s statement on 4 March read:
"As with Sir John's previous reports, this one raises almost as many questions as it answers. The devil will be in the detail but we have already spotted a number of areas which raise grave concerns. Among these are the criteria for a comparator fund which seems to be skewed to the worst performing life offices, rather than the household names, and the composition of the panel of three actuaries hired to peer review the actuarial work of Towers Watson, work which the Treasury is refusing to publish. We are shocked but not surprised to learn that the peer review panel has been selected by Towers Watson - the very people whose work is being reviewed! We want to see the work to ensure proper transparency."
10/03/2010 - Minutes of the all-party group
The all-party Parliamentary group was an astonishing success, with 90 MPs attending. However, Liam Byrne proved as evasive as ever. You can now access the official minutes.
The next day Liam Byrne wrote a letter to the committee’s joint chairs to clarify some of his comments. Encouraging news for Estates. Note, however, just how evasive he is at para 6 on means testing.
Membership of the all-party group now stands at 150.
Read EMAG’s briefing paper supplied to MPs in advance of the meeting
01/03/2010 - The Pru stitches up the WPAs
The deal done by Vanni Treves and Charles Thomson in 2007 sold the locked-in with-profits annuitants down the river. Far from being a White Knight, the Pru has performed abysmally by moving the Equitable’s annuitants £1.8 billion fund from Gilts and Bonds into Equities at the worst possible time. In consequence the annuitants continue to suffer cuts and most are now having to survive on about 50% of the annual annuity that they were receiving in 2002. Meanwhile, the Pru is bidding £23 billions for AIG Insurance’s Asian operations. It time Equitable’s impoverished annuitants started to make their disgust at the Pru’s treatment known.
01/03/2010 - Honor Blackman, our own heroine
As is apparent from the huge article about Honor in The Daily Telegraph (26 February), Honor is prepared to brave the elements on sufferers’ behalf. The last line of this huge morale-boosting article is a direct quote from Honor: "I am happy to man the guns for EMAG, any time."
Honor attended the all-party group as EMAG’s guest.
24/02/2010 - Cameron comes out
At a 'Cameron Direct' meeting in Romsey, Essex in mid-February David Cameron went further than the Tories have done before in committing to resolving the Equitable scandal. He told the audience his views on resolution:
"The Government has put it off and put it off and in a very sick way, I think, they’re waiting for people to die. If we win the election, we’re going to sort out Equitable Life very early on."
Read James Kirkup’s article in The Telegraph 18 Feb, 2010
24/02/2010 - Honor Blackman's press briefing
Honor Blackman and EMAG presented to the press on 18 February a proposal for interim tax-free payments on account of two years worth of current annuity, to be dispatched immediately by the Pru to the 44,000 living WPAs. It was a VERY successful initiative, garnering considerable press coverage.
See also:
EMAG’s press release explaining the proposed payment on account for locked in annuitants.
See photographs in the photogallery (top rhs) at: www.equitablelifemembers.org.uk
It will help give the 65 regional teams ammunition to talk to all prospective parliamentary candidates and also for informing MPs in advance of the all-party meeting (see Stop Press)
16/02/2010 - EMAG met the Treasury
On 5 February three EMAG board directors met with a Treasury director, Mike Williams, and his team responsible for implementation of whatever scheme the Treasury chooses to approve. They await Sir John’s recommendations, due in May and have only just commissioned Deloittes to advise on how those eligible can be tracked down.
Meanwhile, elsewhere in the Treasury, a different team strains every nerve to pretend the High Court had not found the original Command Paper’s proposed scheme unlawful and they’re still fighting a formidable rearguard action, as shown by their representations appended to Sir John’s second Interim Report.
Read More...
16/02/2010 - EMAG response to Interim 2
Sir John Chadwick’s second interim report was published on 16 December. It was a confused, contradictory and inscrutible document and, per usual, it called for further submissions.
Read EMAG's highly critical Executive Summary
The current timetable is that Sir John anticipates publishing a third Interim Report early in March and submitting his recommendations to the Treasury, for them to accept or reject at will, in May. Hardly the fast-track that Liam Byrne has promised MPs but it most effectively dumps resolution onto the next administration.
15/01/2010 - One year on
On 15 January 2009 Yvette Cooper, then chief secretary to the Treasury, finally gave the government’s response to the PO’s report that had been published six months earlier. It was pure sophistry. The details of the device of appointing Sir John Chadwick to advise on certain aspects of a scheme to be devised by the Treasury was only revealed hours later. EMAG successfully challenged in the High Court and hugely expanded the period that the Treasury have to accept as having been maladministrative, Meanwhile, Sir John makes slow progress on the timetable the government always had in mind – report AFTER the general election. Cynical or wot? Read his inscrutable second interim report of 16 December, 2009.
Read EMAG’s press release.
See See press coverage.
Read Yvette Cooper’s speech and replies in the debate a year ago and marvel how she talked out of both sides of her mouth
