Quotes

• “Thank you for your email of 16 August regarding Equitable Life. I am sorry to read that you are one of the many Equitable Life policyholders who has suffered as a result of the company's dubious practices, and particularly as a result of the disgraceful regulatory failures and the Government's subsequent mishandling of the collapse.

  The Parliamentary Ombudsman's recent report was a damning indictment of the Government's handling of Equitable Life. It identifies serial regulatory failures, a number of which occurred between 1998 and 2001 when Gordon Brown and the Treasury had responsibility for the regulation of Equitable Life. The report makes it clear that prompt action could have been taken then which would have avoided the hardship that so many people have subsequently suffered.

  As you are probably aware, the Ombudsman makes two recommendations. The first is that the Government should make a public apology for maladministration. The second is that, because policyholders suffered losses due to maladministration, they should receive compensation from the Government. She advises that the next stage is to assess the basis on which payments to policyholders should be calculated and to whom these should be made.

  I believe the analysis provided by the Ombudsman in her report is thorough and rigorous. I support her recommendation that policyholders should receive compensation to put them back into the financial position they would have been in had the maladministration not occurred. I also support her recommendation that action should be taken promptly, within six months. This is critical in the light of the many years it has taken for a comprehensive enquiry to be completed. The Conservative opposition will be exerting strong pressure on the Government to move quickly on the Ombudsman's recommendations. If the Government continues to drag its feet on this we will act ourselves once a General Election result puts us in a position to do so.

  If you disagree with my position on this please let me know; I am committed to representing the views of constituents. In addition to writing to Government ministers, I am in regular contact with Conservative MPs and policymakers to advise them of the views of people in this constituency.”

  A good political response from a Tory in a marginal seat.

  Here's a Q & A on frequently asked questions.

• Parliamentary Ombudsman's report
  Equitable Life: A decade of regulatory failure

  “Dear Member,

  The Parliamentary Ombudsman recently published her report into the failure of the regulation of Equitable Life. We felt it important to let you know our views.

  The report

  The Parliamentary Ombudsman investigated the actions of the regulators of Equitable Life (including the Government Actuary's Department) during the 1990s. She summed up her conclusions in the title of her report - "Equitable Life: a decade of regulatory failure".

  Her central recommendation is that the Government should set up and fund a compensation scheme with the aim of putting "people who have suffered a relative loss back into the position that they would have been in had maladministration not occurred."

  She does not make this far-reaching recommendation lightly. She recognises that payment of compensation must come at the expense of the Government which will always have priorities for the use of tax-payers' funds. She has spent 4 years investigating and compiling her report including a careful consideration of the responses of the regulators to drafts of the report during the process. Yet, she has unequivocally recommended the establishment of a compensation scheme.

  You can read the report for yourself on the Parliamentary Ombudsman's website www.ombudsman.org.uk

  What next?

  The Parliamentary Ombudsman has made her recommendations to Parliament. It is up to the Government whether to accept and act on those recommendations. However, she has also invited Parliament to debate her report.

  Our response

  The Society fully accepts the Parliamentary Ombudsman's report. The depth and rigour she has applied (it runs to over 2,800 pages) and the degree of maladministration she has revealed (10 separate counts stretching over a decade) makes her recommendations reasonable and proportionate in our view.

  We shall be lobbying MPs in all the major parties to support the speedy implementation of the Parliamentary Ombudsman's recommendations. You can also help by contacting your MP.

  ACTION

  As Parliament is likely to debate the issue, we believe that it is important for MPs to understand the views of their constituents. We, therefore, recommend that you write to your MP and let him or her know of your interest in the issue. MPs of all parties are always strongly influenced by the views of their electorate. If you do not know how to contact your MP, you can find out on the internet by entering your postcode at www.theyworkforyou.com. Alternatively, you can telephone the House of Commons Information Office on 020 7219 4272. They will tell you who your MP is and give you the address to write to.

  Conclusion

  We believe that if many policyholders write forcefully to their MPs the prospects for securing Government compensation will be improved. We also believe that it may speed up the process.

  You need to be aware that the Ombudsman has not concluded that all policyholders have suffered a financial loss. However, she does believe that in many cases "a loss has been sustained, relative to what would have transpired had those individuals saved or invested with a comparable with-profits fund." It is intended that the detailed rules will be determined by an independent compensation scheme.

  If you have any questions relating to this letter please call 0800 408 0097 (or 00800 1020 1040 if calling from outside the UK).

  Yours sincerely.
  Vanni Treves and Charles Thomson”

  Mail on Sunday, Jeff Prestridge, 10th August, 2008

  For example letters from EMAG members to their MPs click here.

  See also, Paul Braithwaite’s article in The Daily Telegraph

• “As an EMAG member and Licensed London Cab Driver I took your advice and protested to a Member of Parliament.

  Driving down Whitehall on the last day that Parliament sat I was hailed by Alistair Darling.

  He was a little surprised when asked by me "and when will I get compensation for my Equitable Life Pension"?

  "I will do what I can" was his reply.

  I retorted "we are not all barristers you know!"

  The conversation might have put him off his "last day of school" meal, it certainly cheered me up and I hope you enjoyed the anecdote.

  Thank you all at EMAG for the fine work you are doing in trying to get compensation from one of the worst administrations since the war."

  (An email received by EMAG from a member)

• “Own up and pay up is the simple message from Equitable Life policyholders. There is at last real hope for compensation for hundreds of thousands of people who were Equitable Life policyholders when the mutual society virtually collapsed seven years ago.

  The Equitable Members' Action Group (EMAG) was formed in the summer of 2000 and it seeks to represent all investors, past and present, whatever their type of policy, in the pursuit of compensation from Government. In 2004 we fought for a second report by the Parliamentary Ombudsman (PO) into the regulation of the society. With the report finally coming out a fortnight ago, finding the Government guilty on 10 counts of maladministration and injustice and calling on it to set up a compensation fund, justice could finally prevail.

  We are delighted with the sure-footed rigorous report, which must be the soundest and proudest achievement of the PO's office and a credit to all involved. But that office is under siege. Its last three reports were initially rejected by this Government. Eventually, through the determination of the protagonists and the support of fair-minded back-bench MPs and the media, those reports have been honoured by a reluctant Government.

  The last one called for compensation for 150,000 people who lost money when their occupational schemes failed. In that closely parallel case, complainants won £3bn in compensation this January - with no outcry about the public purse. There is a mis-match between what the Government says about rekindling trust in politicians and its disposition to Parliament's own Ombudsman. What is the point of the PO if the Government repeatedly shows two-fingered contempt for the office?

  This latest 2,819-page PO report on Equitable boils down to two crystal-clear recommendations: the public regulatory bodies should apologise and the Government should set up a compensation fund immediately under an independent tribunal. It was depressingly predictable that the Treasury, which had the draft report 17 months ago, should play for time and say it will not respond until the autumn. Its strategy ever since 1998 has been to stuff the policyholders with all the losses and spin that they were all "fat cats" who could afford to bear the losses.

  When the society closed its doors there were two groups: one of about one million policyholders with an average of £4,000 invested in additional voluntary contributions (AVCs) or group schemes and the other, 500,000 serious savers for retirement with an average pot of £45,000. Today, that would buy an annuity of about £70 per week - hardly fat cat. And what of those smaller investors? There were, for example, many thousands in the NHS's AVC scheme with a few thousand pounds - nurses and hospital workers who could ill-afford their average loss of 15pc.

  Inevitably, with everyone nervous about the economy, there's a predisposition against the public paying up, especially after the tens of billions the Government has dubiously risked in bailing out Northern Rock.

  It's unfortunate timing that an investigation into regulation in the 1990s has been so delayed by Government sophistry that it has appeared only after seven years. But it's a sad fact that the Equitable victims are ageing and dying - 30,000 so far, with an estimated hundred more each week. This is why time is absolutely of the essence and the PO was right to emphasise the need for urgent resolution.

  It's been suggested that investors in other lifecos have equal claims for disappointing results. If so, where's their outcry? Equitable has been subject to no less than a dozen substantial reports before the PO's office.There have been none into competitors, precisely because Equitable was unique. Equitable grew almost exponentially through the 1990s, starting with a £6bn with-profits fund. A decade later it had over a million new policyholders and a massive extra £20bn added, all invested after the regulators could and should have warned us off or closed the fund.

  Equitable Life was where trust in our regulators and the UK's financial services industry broke down. If it had been addressed honestly and swiftly, the Northern Wreck may not have happened. The damage done is incalculable and ongoing. The Government must be made to change its policy of prevarication and face the fact that this can't go on - enough is enough.

  Victims should not only sign up to The Daily Telegraph's petition but, more importantly, take the time to write to MPs expressing their outrage and an expectation that their MP will support the PO's recommendation on compensation.

  Further, readers can show support by registering with one of 20 new regional pressure groups and by joining EMAG. Without our members' backing we certainly would not now have the real prospect of justice.

  EMAG's message to Parliament is simple - to start to rebuild our trust, change the record, own up and pay up.”

  Paul Braithwaite, General Secretary of (EMAG)
  The Daily Telegraph 28th July, 2008.

  To read the full article as submitted.

• “Frankly, I don’t recognise the FSA I’ve heard described here this morning. NO mention of Equitable Life and the Parliamentary Ombudsman’s recent report??

  For the past six years I’ve come along to these annual public meetings and asked questions about the regulation of Equitable Life and FSA complacency. I’ve received platitudinous replies from a stream of different executives. Well, finally, my aspersions have now been TOTALLY vindicated, by Parliament’s very own Ombudsman’s Report, last week.

  I don’t think that the industry gathered here today will be in the least bit surprised by Ann Abraham’s damning findings. The damage done to this industry by Equitable Life and to the UK’s regulators is incalculable. And it will continue until the Government owns up and pays up and clears the slate.

  That well-respected Mail on Sunday financial editor, Jeff Prestridge, wrote last Sunday:

  “If the financial regulators showed half the passion for the truth as Ann Abraham does and a smidgen of her diligence, we certainly wouldn’t be in the mess we are in today – where the reputations of the Financial Services Authority and the financial services industry remain in tastters, and trust in both is broken…”

  So, here’s my question Mr Chairman:

  The FSA has been found guilty by the Parliamentary Ombudsman’s newly published report, entitled “a decade of reulatory failure”, on FIVE major counts of maladministration in the period to December 2001 – which I do recognise was not a period on your watch, Mr Chairman. But it is abundantly apparent from those most damning findings that the FSA’s attitude to protecting consumers is but a poor relative to its overarching preoccupation with maintaining confidence in the industry.

  Since 2001, in my opinion at the cost consequence of removing valuable checks and balances, the FSA has been laughably self-policing. Hence, any further sins on Equitable Life have never yet been brought to light. Despite the Tiner reforms and principles-based regulation, the FSA has humiliatingly had to admit to chronic failure in supervision just one year ago in the Northern Wreck.

  My own view is that the FSA should be stripped of Consumer Protection, but I recognise that that is a matter for Parliament.

  Today, I'd like to suggest that the board of the FSA and the respected incoming chairman, Lord Turner, who I see sitting on my right, itself volunteer that the FSA should become subject to the ongoing and retrospective remit of both the NAO and the Parliamentary Ombudsman, in order to begin to rebuild the almost non-existent public's trust in YOUR organisation, Mr Chairman."

  Paul Braithwaite’s verbal question put to chair Sir Callum McCarthy at the FSA’s annual public meeting 24th July, ‘08

• “The final judgment: regulators, too, were far from Equitable.

  It was worth the wait.

  The Parliamentary Ombudsman's report into Equitable Life, which has taken four years to see the light of day, found catastrophic failure on the part of government regulators over a decade and has recommended an apology and a government compensation scheme.

  The specific findings of the Ombudsman, Ann Abraham, are damning. In the run-up to the crisis, the regulators were 'passive, reactive and complacent', failing to question Equitable's annual returns, failing to resolve issues over its solvency and failing to establish how it could afford to pay out bonuses. They also allowed its then boss, Roy Ranson, to run the company as a personal fiefdom.

  From 1998 to the end of 2000, when Equitable closed its doors, they were aware of problems but their actions were 'largely ineffective and inappropriate,' and they allowed the insurer to remain open on an unsound basis. They let it submit misleading returns, in which its apparent solvency position was flattered by a reinsurance deal which had 'no economic substance at all'.

  Most shocking, during 2001 the regulators gave a misleading impression to policyholders and the public by falsely stating that Equitable had always been solvent for regulatory purposes and by giving assurances that it had always met its other regulatory requirements.

  I can personally vouch for their complacency: at a lunch only days before the insurer shut up shop, I was shocked when one senior official opined that this would not be such a terrible outcome for savers.

  Seemingly, he was impervious to the damage this would cause not only to individual victims, but also to wider public confidence in pensions savings.

  Alistair Darling will not respond formally to the report until the autumn but the attitude of this government has been to resist claims for compensation, and to imply that the policyholders were 'well-heeled' and so somehow undeserving - an oddly Old Labour slant on the affair. The company, this argument goes, brought about its own misfortunes, so taxpayers should not be forced to pay for it.

  The men who ran Equitable were indeed primarily responsible, though the regulators have let them escape relatively lightly. Ranson was expelled from the actuarial profession last year, but he is in his late seventies and entitled to a substantial free pension from his former employer. On account of his age, he was not punished by the Financial Services Authority.

  His lieutenant, Chris Headdon, is serving a six-year ban meted out by the FSA from holding a senior position in the financial services industry. It expires in 2010, quite possibly sooner than the victims will receive payouts. He will be in his early fifties, still young enough to make more money to add to the £95,000 pension he is due to receive from the Equitable staff scheme.

  It is true that it will be hard - very hard - for the government to find the £4.6bn or so that policyholder action groups reckon will be needed to pay compensation. The budget deficit for last month was the worst June figure ever recorded, and people are questioning whether the Equitable victims are the most deserving recipients of scarce cash. My view is that compensation should be paid, despite the obvious difficulties.

  First, the notion that all Equitable customers are wealthy is not true. The average policy was enough to buy a pension of just £70 a week, not riches beyond the dreams of avarice. If some savers are a bit posh, so what? It doesn't make the persistent failures of the regulators more acceptable. Do people really believe it is OK for City regulators to fail horribly, and for the government to ignore the Ombudsman, so long as wrongdoers only milk the middle class?

  Second, the government is not being asked to bail out investors because of the misdeeds of the insurer's management, which would be morally hazardous, but because of the inadequacies of its own departments and regulatory bodies.

  Third, if ministers defy the Ombudsman, who provides a vital safeguard for the public, that will be an outrageous show of contempt for her office and its role in holding governments to account. It hardly encourages better regulation in the City if the government flouts its own watchdog.

  Ruth Sunderland, The Observer, Sunday 20th July

• “Brown set to be blamed and shamed
  Yet another of Gordon Brown's chickens will be coming home to roost next week, when the Parliamentary Ombudsman, Ann Abraham, publishes a new, damning report that will lay the blame for the collapse of Equitable Life firmly at the feet of the Government.

  In her conclusion, she will call on Mr Brown and Alistair Darling, the Chancellor, to stump up something approaching £4bn in compensation for the thousands of customers who lost out, and accuse the Department of Trade & Industry, the Government's Actuary Department, the Treasury and the Financial Services Authority of maladministration. If Mr Brown still has any credibility left when it comes to financial regulation, next week should just about finish him off………………..

  So what happens now? In any respectable democracy, you would hope that the Government would listen to the conclusions of its own independent regulator, apologise, and then get to work on finding the money as soon as possible for those who have lost out. Sadly, however, humility has never been Mr Brown's strong suit.

  More likely, we will see an arrogant rejection of the Ombudsman's findings and an attempt to kick the report into the long grass – just as we saw with the Ombudsman's report into the occupational pensions scandal two years ago, where 125,000 people lost some or all of their company pension savings. That report was not so very different from this one. Once again, the Ombudsman found the Government guilty of maladministration, and once again, it recommended compensation.

  However, there was one crucial difference. Back then, such a damning report by the Ombudsman, followed by such a swift brush-off by the Government, was pretty much unprecedented. In the months that followed, angry select committees criticised the Government for brushing aside the conclusions of such an important public body, while a judicial review of the Ombudsman's report upheld her conclusions and eventually brought enough pressure to bear on the Government that it was forced to meet the demands of the pensioners.

  This time round, all of that is fresh in the memory, and politicians are in no mood to let Mr Brown hijack the workings of democracy yet again.

  Furthermore, having seen how her occupational pensions report was treated, the Ombudsman has ensured that her new report is bulletproof – tough enough to stand up to any judge if the Government tries to play the same funny games as it did last time, two years ago.

  So, in answer to my question – what happens now? – I'm really not sure. What I hope happens, however, is that MPs from all parties have the resolve to ensure justice is done. Although £4bn sounds like a lot of money at a time when the Government is already presiding over a £7.5bn black hole in its books, it is not so much when broken down on an annual basis.

  Some 30,000 of those affected by the Equitable crisis have died over the past eight years. Many of them were forced to live out their last few years on meagre pensions. Fifteen more die every day. If Mr Brown refuses to step up and act responsibly this week, he must be forced to.

  The Independent, James Daley: 12 July 2008

  Note: Do follow the weeks excellent press coverage by clicking on the lhs MENU and highlight “Media Stories – Best Articles”. Also, follow the lead up by reading clicking on “Past Quotes”.

  Read the full article in the Independent and more press coverage from 12th July here

• “Equitable Life members threaten to sue.
  Disgruntled members of Equitable Life will sue for compensation if the government rejects a damning report by the parliamentary ombudsman, due to be published next week.
  
  The Equitable Members’ Action Group (EMAG), an independent association of Equitable members and policyholders, plans to instigate a judicial review if the government rejects the findings of Ann Abraham, who is expected to call for compensation for policyholders who lost out from the near-collapse of the life assurer.
  
  "We are confident that there will be a recommendation for compensation and we are hopeful that the government will change its stonewalling behaviour towards the parliamentary ombudsman. But we are preparing for the worst, should that strategy not be changed,"
  said Paul Braithwaite, EMAG general secretary.
  
  If the government refuses to accept the findings, any party affected has a right within three months to instigate a judicial review.
  
  Alistair Darling, the chancellor, has been kept abreast of drafts of the ombudsman's report and Treasury lawyers have also pored over the texts…………
  
  In any event, Mr Darling is expected to ask for time to study the final report before giving his view on compensation.
  
  Vince Cable, Liberal Democrat deputy leader, said yesterday:
  
  "Although the failure of the regulators occurred under the last Conservative government, a condemnation of civil servants by the ombudsman would be deeply embarrassing, not least if it includes a recommendation for compensation."
  
  Ms Abraham is expected to point to a string of regulatory failings as far back as the end of the 1980s until December 1 2001, when the review period ends, say people familiar with the report.
  
  Her findings will blame the now defunct Department for Trade and Industry, responsible for supervising Equitable until the end of 1997; the Treasury, which then took over supervision; and the Financial Services Authority, which took day-to-day responsibility for regulating insurance in 1999. The Government Actuary's Department, which provides actuarial services to government departments and was included in the scope of the review in October 2004, is also expected to be the subject of criticism.
  
  Estimates have put the cost of compensating the more than 1m policyholders who lost money in the Equitable debacle at about £4bn.”
  
  Financial Times, by Andrea Felsted, George Parker and Alex Barker: July 11 2008
  
  Note: Do follow the weeks excellent press coverage by clicking on the lhs MENU and highlight “Media Stories – Best Articles”. Also, follow the lead up by reading clicking on “Past Quotes”.
  
  Read the FT full article and more press coverage from 11th July here.

• “Ombudsman to savage government and FSA over Equitable collapse
  
  · Darling put on stand-by for highly critical report
  · Compensation claims could amount to billions
  
  The government is gearing up for a battle with the parliamentary ombudsman over an expected highly critical report next week on failings by the Treasury and regulators that led to the collapse of the world's oldest mutual insurer, Equitable Life.
  
  The report, to be published next Thursday, is expected to find the Treasury, the Financial Services Authority and the government actuary's department to blame for not safeguarding investors' rights, which could lead to claims against the government amounting to billions.
  
  The report is understood to have found maladministration and breaches of rules by the regulatory authorities……..
  
  Alistair Darling, the chancellor, is planning to resist pressure to pay out billions in compensation to several hundred thousand Equitable Life policyholders by insisting that the government cannot be held liable for all the cash investors lost. Ministers who have read the report are already taking legal advice to see if they can limit their liability because they do not want another multibillion-pound bill following the bail-out of Northern Rock………….
  
  Now she has found there have been failures in Whitehall, which will add to government pressures at a time when money is scarce. The fact that the Guardian has learned that the report was sent straight to the chancellor suggests it is regarded as a serious headache for ministers.
  
  Last year, following a separate inquiry, the European parliament published a highly critical report which called on Britain to set up a compensation scheme for policyholders who lost money.
  
  Paul Braithwaite, general secretary of Equitable Members Action Group (EMAG), said: "After eight years of fighting for recognition that regulators were negligent, EMAG is delighted that the Treasury delays have finally been overcome and the report will come to light next week. We anticipate there will be recommendations of compensation, and the surprise would be if that were not so."
  
  Abraham originally indicated she would complete her investigation before the end of 2005, and campaigners have in the past claimed that the hold-up is down to ministers stalling for time. These suspicions were fuelled in late 2006 when she said it had become clear that some evidence "had not been disclosed to us". This "missing evidence" - later handed over - "was extensive and might be critical".
  
  Campaigners say the delays mean that an estimated 30,000 policyholders have died without finding out what happened.”
  
  David Hencke and Rupert Jones in The Guardian 10th July 08
  
  Read the whole article and 10 more newspaper stories published on 10th July.

• “Ann Abraham's report into Equitable Life shows the buck stops with the Government.
  
  Ann Abraham's report into the collapse of Equitable makes damning reading. The conclusions, seen by The Daily Telegraph, will leave readers in no doubt next week, on official publication, that the buck must stop with the Government.
  
  Labour's filibustering when it comes to accepting the Government's share of the blame has heaped scandal on scandal for the million or so Equitable savers who have been left in reduced circumstances.
  
  Many of these are elderly people who have been left to eke out their remaining years in penury. Having stood behind the savers of Northern Rock, the Government has set itself an onerous precedent.
  
  Nationalisation was never the best route to take but, having failed to deliver a market solution for the lender, the Government must now live with the full implications of its actions. The Treasury can't bail out one set of savers and not another - both left high and dry by the same combination of failings.
  
  Of course the billions that the Government now faces in compensating Equitable policyholders could not have come at a worse time.
  
  Politically, it will highlight yet more failings by the Government in the world of finance and the public purse can ill afford yet another claim on it thanks to officialdom's mistakes.
  
  We, and most importantly Equitable policyholders, have waited years for the publication of Abraham's report. Alistair Darling and Gordon Brown cannot simply try to kick this issue into the long grass again.
  
  Maladministration by the Government contributed to Equitable's collapse and so, unfortunately for taxpayers, the Government should rightly pay compensation. But it must be paid quickly and without further delay for the sake of all those long-suffering Equitable victims who have waited years for justice.”
  
  Damian Reece, Daily Telegraph 9th July, 2008
  
  Read two further and more comprehensive articles, also in the Telegraph 9th July.

• “With-profits, just without the profit....... In just over a week, Parliamentary Ombudsman Ann Abraham will deliver her much-delayed report into the Government's role in the near demise of Equitable Life eight years ago.
  
  She is expected to recommend compensation for those who invested in what they believed to be a financially healthy, well-regulated mutual only to discover too late it was anything but.
  
  Abraham is understood to have concluded that the Government was culpable of standing idly by, letting people continue to take out Equitable policies in the late 1990s when it knew the mutual was teetering on the brink of financial ruin.
  
  Though her recommendation of compensation will be welcomed by more than a million past and present policyholders, there seems little chance of Gordon Brown paying up. Two years ago, Abraham's call for compensation for the 125,000 victims of failed pension schemes was insensitively ignored by Labour, though in its defence it has since come up with a compensation package to appease most victims.
  
  Equitable Life campaigners - still laudably vocal eight years on - are expecting an almighty battle. Paul Braithwaite, general secretary of Equitable Members Action Group, says: 'We expect Brown to fight tooth and nail to avoid paying out a penny in compensation.'
  
  Commendably, EMAG is taking the initiative, setting up a network of regional 'action' groups to press local MPs to support their campaign. Equitable Life policyholders can obtain more details by visiting: emagregional.org.uk
  
  Jeff Prestridge in The Mail on Sunday, 6th July 2008

• Fair play and pay for Equitable victims
  
  The near collapse of Equitable Life has become a forgotten scandal, but it is about to resurface in a way that promises to be deeply unpleasant for the government. In a couple of weeks, Ann Abraham, the Parliamentary Ombudsman, will finally publish her report into the affair after four long years; this document represents the last hope of government compensation for more than a million policyholders.
  
  Equitable Life is not just a cold case. It is part of a pattern of inadequate regulation, and of failure by the government to grasp the need for trust in the pensions system. There is also an important issue of accountability. The Ombudsman's function is to carry out independent investigations into complaints about government departments, but this is fatally undermined if those in power fail to act on her recommendations. There is no excuse for Gordon Brown - especially if he flouts her over Equitable.
  
  Comment, Ruth Sunderland, The Observer, Sunday 29 June 2008

• “We're paying the price for Gordon Brown's fairweather policies
  
  One of the Bank of England's main jobs is to maintain "financial stability" by helping to supervise the banking system. On top of that, of course, the Bank's Monetary Policy Committee sets interest rates.
  
  The manner in which both roles are executed - regulatory and monetary - matters hugely. The quality of the Bank's decision-making affects practically every British citizen……
  
  In 1997, in his first act as Chancellor, Gordon Brown gave the Bank "operational independence", created the MPC, and switched interest rate powers from the Treasury to Threadneedle Street.
  
  At the same time, partly to smooth feathers in Whitehall, Brown set up the Financial Services Authority, a Treasury satellite, to oversee lending institutions. For decades, oversight of our banking system had been split between the Bank (providing brains and inside knowledge) and the Treasury (political authority and cash). But since 1997, the FSA has been involved.
  
  I'd contest that this "tripartite system" - three players, not two - was the root cause of the regulatory lapses behind Northern Rock. By leaving the Bank in charge of "financial stability", but denying it detailed knowledge about individual banks, Brown left the Old Lady "flying blind".
  
  While the Treasury denies this, last week's move to create a new "financial stability committee", an adjunct to the Bank of England's court, is an admission of the tripartite regime's failure.
  
  Chancellor Alistair Darling says the new committee will bring "valuable external assistance to bear on the Bank's decision-making". But if the bulk of its supervisory staff hadn't decamped from the City, and been hived off to the FSA, that wouldn't be necessary.
  
  …………with ministers refusing to admit the tripartite system was wrong, we remain in the ludicrous position where, when it comes to the power of the new stability committee, the Treasury says one thing and the Bank says another.
  
  After months of in-fighting, our post-Northern Rock regulatory regime remains a mess. The supervision of our banking system is being held together with a blob of political fudge. Meanwhile, billions of pounds of sub-prime liabilities are swirling around, the inter-bank market is still fused, and the integrity of our banking system remains very much at risk.
  
  Yet all ministers - and the Prime Minister - can think about is spinning themselves away from blame. The UK boasts some of the world's finest financial minds. We invented many of the cardinal principles of modern banking. Has it really come to this?
  
  This regulatory bust-up isn't only a disaster in itself. It also comes at the worst possible time. For ministers have insisted on lording it over the Bank just when we need Mervyn King's men to look as strong as possible……….
  
  Given all this, it is absolutely vital that the Bank of England is granted - and is seen to be granted - the ultimate authority to fight inflation. Ministerial calls for rate cuts, and semi-whispered comments about King, must cease. If the Bank raises rates, the Government needs to grin and bear it.
  
  We are now in a serious situation. The political games need to stop.
  
  Liam Halligan, Sunday Telegraph 22nd June, 2008

• “Dear Chancellor,
  
  Last week the Parliamentary Ombudsman (PO), Ann Abraham, confirmed that she will lay her second report into Equitable Life before Parliament during the week commencing 14 July. The report, four years in the making, will be of great importance to those like our supporters who seek compensation from government for the gross regulatory failure which EMAG maintains caused the losses that they personally suffered in the near-failure of Equitable seven years ago and ever since.
  
  Could you please tell us if HMG intends: -
  
  - to respond to the report on its day of publication by means of a statement made in the Commons and, if so, will the statement be written or oral?
  
  - to hold a full debate on it in the Commons, before or after the summer recess?
  
  - Will both the statement and any subsequent debate also address the EQUI European Parliament's “Report on the Crisis of the Equitable Life Assurance Society”?
  
  If not, how and when does HMG intend to respond to EQUI, given that most of its 46 detailed recommendations on EU regulation fell outwith the remit of the PO? Thirteen months is far too long to have to wait for a response from HMG to this report which was adopted by an overwhekming majority of MEPs (609 to 11), representing all major parties and all 27 member states, in the Plenary session on 19th June 2007.
  
  When the President of the EU Parliament wrote to Gordon Brown last December pressing for HMG's response to the report you replied weeks later to say that HMG would continue to wait for the PO’s report. The Parliament and EMAG, as the progenitors of the Inquiry, expect HMG to honour its obligations and provide a reasoned and detailed response to EQUI.
  
  Yours sincerely,
  Paul Braithwaite, General Secretary of EMAG Ltd 9th June, 2008
  
  PDF of this letter

• Exactly one year ago, Gordon Brown’s biographer Tom Bower wrote this in the Sunday Times, one month before Gordon Brown became Prime Mnister:
  
  “‘Yes, prime minister’ – is that all that Gordon Brown will want to hear from his civil servants? There exists some worrying evidence
  
  "Five weeks of panic” was one description of the mood inside Gordon Brown’s inner sanctum in early 2004. The chancellor had been briefed that Lord Penrose had delivered his report about the collapse of the Equitable Life insurance company resulting in losses of about £4 billion to 750,000 policyholders.
  
  To Brown’s alarm Penrose had circumvented his restricted terms of reference and partly blamed the government’s “ineffective’ regulator for the losses and condemned the “manipulation and concealment” by some managers. If the policyholders successfully sued the government, Brown was advised, the nation’s finances would be torpedoed.
  
  “Find a way to get us out of this,” ordered Brown in what has been portrayed as “ice-cold panic”.
  
  The events following Brown’s order raise serious questions about the next prime minister’s pledge to restore traditional, spin-free government and his promise to improve his acerbic relationship with civil servants. Having promised at the launch of his leadership campaign in May to “change the way we govern” Brown’s own record on Equitable Life suggests that his self-improvement will be a challenge.
  
  Gus O’Donnell, the Treasury’s permanent secretary in 2004, was the target of Brown’s rage and pleas. He was ordered to produce a “get out of jail card”, including a request to the Serious Fraud Office to consider prosecuting Equitable Life’s directors.
  
  O’Donnell organised the dispatch of the appropriate letter to Robert Wardle, the Serious Fraud Office’s director, but Brown placed him under pressure to do more. Irate MPs representing suffering constituents wanted Brown to answer their complaints personally in the Commons. O’Donnell was ordered to produce written answers that some believed would be distortive…………. over the next five weeks, O’Donnell constructed a wall of obfuscation and interminable delays. His success in orchestrating the protection of “Project Gordon” impressed the chancellor. O’Donnell’s reward was promotion to become cabinet secretary where he now awaits his new master.
  
  The chancellor’s delight was tempered when MPs referred the matter to Ann Abraham, the parliamentary ombudsman. But ever since 2004 the Treasury has inundated Abraham with submissions forcing repeated delays to her draft report, assumed to be critical of the Treasury. It recently delivered a 500-page schedule of objections. Brown’s spokesman called this an example of the Treasury “cooperating fully with the investigation” but insiders admit, “it’s a variation on ‘spin’. Gordon is spinning it out to buy time”.
  
  Cynics believe that even if Abraham criticises the Treasury Brown’s response will mirror his tactics after her recent finding of the Treasury’s maladministration towards occupational pensions. Through a junior minister Brown simply announced his disagreement with Abraham and refused to pay compensation.
  
  That did little to assure critics about Brown’s recent promises of “humbleness” and “new government”. The guide and guardian to restore probity across Whitehall will be O’Donnell himself. His fellow mandarins are asking whether O’Donnell has the strength to persuade the new prime minister to shed his lifetime’s habits. The omens are mixed.
  
  O’Donnell won promotion after witnessing the wreckage of his predecessor’s battles. ………”

• The PO’s report into Equitable Life, four years in the making, will be made public in mid-July:
  For 18 months the Treasury has used every trick in the book to delay and derail this ticking bombshell report. After such deplorable tactics, EMAG is pleased that MPs will finally get to see the PO's report before their recess. Over the summer, hopefully, they will read it and reflect on the stark contrast between the shameful treatment of Equitable pension sufferers and their own gold-plated pensions. The breakdown in trust of regulators started with Equitable.
  
  Paul Braithwaite, EMAG’s general secretary said:
  “If, as EMAG expects, the PO recommends compensation measured in billions, the families of a million pension investors have every right to expect, as the European Parliament has made plain, that the UK Government will do the right thing and compensate the victims promptly. This scandal has been dragged out for seven years, during which time many thousands of Equitable pensioners have died waiting for recompense.”
  EMAG press release 1st June, 2008

• Question at Equitable Life's AGM, Monday 19th May, 2008 from EMAG's Paul Braithwaite
  
  "I was personally very pleased to receive written confirmation from Alistair Dunbar on the 13th May on the issue of retention by the Society of all policy records, which of course you are legally bound under the law of contract so to do, in the following unequivocal way:
  
  “There have been no exceptions to the general policy of not destroying data since the new board has been in place.”
  
  (The board was ratified by the members at the Equitable’s AGM at Canary Wharf in May 2001)
  
  EMAG is delighted that you have been cooperating with the Parliamentary Ombudsman's investigation. And like EMAG, the Society has recently lodged a written response to the PO’s second report.
  
  As you know, EMAG had the courtesy to share our own confidential substantial submission with Charles Thomson a couple of weeks ago and we hope EMAG’s goodwill gesture will be reciprocated. We must surely agree, at this time, to make common cause to maximise Government compensation for all policyholders, present AND past, who suffered from maladministration by regulators - which EMAG has quantified to measure in billions of pounds.
  
  To this end, will you assure us, here and now, that you will open Equitable's books to the Parliamentary Ombudsman in order to help her arrive at accurate figures to help quantify the losses suffered on each individual’s policies?"
  
  Vanni Treves' answer: "YES."

• “FSA: THE FIVE FLOPS
  
  2001 Equitable Life Collapse
  2001 The Split Cap Debacle
  2004 Precipice Bonds Mistakes
  2005 L & G Fines Botch
  2008 Northern Rock Failure
  
  HUMILIATED FSA GOES ON RECRUITMENT DRIVE
  
  THE City's watchdog made an opportunistic play for more resources yesterday as it ritually purged itself over its part in the collapse of Northern Rock, writes Rupert Steiner.
  
  The Financial Services Authority has seen its budget almost double since it was started ten years ago, rocketing from £160m in 1997 to £301.7m for 2007.
  
  But even flush with extra cash the FSA, which is charged with preventing financial catastrophes, presided over a catalogue of disasters.
  
  During its short life its fines imposed on Legal & General were ruled excessive, it admitted to mistakes over its governance of precipice bonds, and failed to spot key problems at Equitable Life.
  
  The most humiliating, the Northern Rock debacle, saw its system of checks and balances failing to prevent the first run on a British bank for more than 100 years.
  
  But yesterday FSA chief executive Hector Sants used the publication of his own internal review of the shoddy handling of the Rock collapse, to push for more staff despite employee numbers having little to do with failings.
  
  This will mean a recruitment drive for up to 100 more regulators.
  
  The most shocking revelation contained in the report was that none of the FSA heads of department had met with Northern Rock since 2005. This has sparked a review of its relationship with so called ' high impact firms' to ensure there is no repeat of the Rock.”
  
  Rupert Steiner, Chief City Correspondent, The Daily Mail
  27th March, 2008

• “How regulation made markets riskier
  Here’s a by no means exhaustive list of financial scandals in the UK over the last 20 years: Barlow Clowes, BCCI, Barings, pensions mis-selling, endowment mortgages, the internet bubble and crash, Equitable Life, split capital investment trusts, Northern Rock.
  
  What do they have in common? All have occurred since the introduction of compulsory regulation of investment business in the UK, under the Financial Services Act of 1986, a system that was brought in to improve protection for investors.
  
  While the actors have changed, and the regulators have appeared under a veritable alphabet soup of acronyms – since 1986 financial market participants have had to deal with, amongst others, SFA, SIB, IMRO, LAUTRO, FIMBRA, the PIA, and now the FSA – it does not take a genius to reach the conclusion that our regulatory system doesn’t work.
  
  Northern Rock exposes flaws in tripartite system
  
  The latest collapse – the failure and nationalisation of Northern Rock – occurred under something called the tripartite system of financial sector regulation, which was introduced by Gordon Brown in 1997. This divided responsibility for the functioning of the markets between the Bank of England, the Treasury, and the FSA. When the bank got into trouble it very quickly became clear that there was noone in charge. The Bank of England governor was forced into a rapid U-turn on intervention, and the Chancellor was panicked into guaranteeing all Northern Rock’s deposits, committing the taxpayer to enormous liabilities. The FSA, in turn, had clearly failed in its duty as bank supervisor.
  
  The regulatory system will no doubt be changed yet again as a result of the Northern Rock affair – perhaps with another shuffle of initials and more work for the brass plate makers. But a fundamental question begs to be asked. What is the point of all these organisations and their rulebooks?...............
  
  Why a regulatory system may be damaging
  
  First of all there is the old problem of moral hazard. If people believe that the regulator will protect them or even bail them out, they are likely to behave more recklessly than otherwise. Equally, an investor may take the fact that an IFA, for example, or bank, has FSA approval as an implicit guarantee that they will not be mistreated. One doesn’t have to look very far to find plenty of examples which contradict this – all the scandals listed above occurred at regulated institutions.
  
  But it is also clear that having an explicit rulebook can make things worse. Take the current credit ratings scandal, where hundreds of billions of bonds were rated AAA by the main rating agencies when they shouldn’t have been (to clarify, AAA is supposed to mean a practically risk-free bond, with little chance of capital loss, whereas a number of recently issued “AAA”-rated mortgage issues have lost up to 40% in price).
  
  This only occurred because many regulations, for example those specifying how much capital a bank must hold against its loans, or those which set minimum ratings for a whole range of investment funds, specify a minimum credit rating. Under pressure to find extra returns for clients who were constrained in this way, clever bankers devised very complicated bonds and obtained the required ratings by making highly subjective assumptions about their likely performance. The fact that the credit rating agencies – themselves a part of the regulatory framework under US law - had a monetary interest in getting new bonds approved and issued compromised their independence and removed an important safeguard for investors.
  
  This is a classic example of “regulatory arbitrage” – where the mere existence of a rule encourages clever lawyers and bankers to find ways around it. Regulation in the USA, for example, under the SEC and the Financial Accounting Standards Board, has become almost entirely rules-driven, and an explosion of off balance sheet schemes to get round them has resulted. This has had predictable consequences – Enron, for example, was able to hide its insolvency for a long time by the use of such accounting schemes, and more recently banks have got into similar problems by using SIVs to push real economic exposures out of sight.
  
  More importantly, the overall effect has been a significant deterioration in the transparency of the financial markets, as noone knows which skeletons are lurking in whose closet. Banks and fund managers have become reluctant to trade with one another, as noone trusts the financial health of the counterparty – who knows if the bank you want to trade with might be hiding billions of losses?
  
  And so the increase in regulation has had precisely the opposite effect of what it was meant to achieve, making the markets more opaque and riskier for all of us. This is before even mentioning the costs that regulation imposes – costs that are all passed on to the end-user as higher fees.
  
  Simplicity and clarity is best
  
  Will anything change? Under the financial leadership of Brown and Darling in the UK, this seems highly unlikely. The government has its own history of off balance sheet shenanigans through PFI schemes, and its incessant tinkering with the tax system reveals an instinct for adding, rather than reducing complexity. This is before even mentioning the whole new system of EU-wide regulation under the ugly acronym of MiFID. We now have a jungle of rules from which it will be difficult to escape.
  
  Yet for the health of the financial markets, and the economy as a whole, it is vital that we start to move back towards simplicity and clarity. Would it not be better to teach investors the only real rule they need to know – “Caveat emptor” or “Buyer beware” – and let all the rest be done on trust? Financial scandals will continue to occur, as they have always done, but at least we will do away with the pretence that that the state and its agencies can somehow protect us from loss (or, more importantly, from the consequences of our own bad decisions).
  
  This may seem like wishful thinking, when the knee-jerk reaction to the ongoing credit crunch is likely to be more, rather than less regulation. But a return to a simpler system based upon basic but quite adequate legal protection, such as that against fraud and breach of contract, is surely preferable to the unstable and dangerous financial market structure that we now see.
  
  Paul Amery in “Money Week”, 1st March, 2008
  (Paul Amery is an independent financial analyst based in London, formerly a fund manager and bond trader.)

• ”We're meant to have a government of all the talents, so, can Vince Cable please be co-opted as Chancellor of the Exchequer? He alone has consistently called it right and he has a better grip on economics and regulators than any of the lightweight team at the Treasury.
  
  It is an outrage that this Government can bail out the Labour heartland's Northern Rock, but still refuses to address the failure of regulators of Equitable Life, which has damaged the pension savings of far more than a million families.
  
  If the regulation of Equitable had been admitted and redressed, then the Financial Services Authority's cock-up on Northern Rock could never have happened. The EU Parliament's 47 recommendations contained in the EQUI report of last June remain unaddressed. No wonder no one trusts British regulators.
  
  Paul Braithwaite, General Secretary, EMAG.”
  
  Published in The Daily Telegraph 19th February, 2008

• “Slip-up leaves Equitable pensioners on their backs again. If the latest misfortune to hit Equitable Life pensioners wasn't so tragic, it would be hysterically funny. Do you remember the old Charlie Chaplin gag where the clown keeps bumping into people and objects he hasn't seen? Or should that be Mr Bean? Whichever, he starts looking where he is going and spots a banana skin lying in his path. Smiling with relief that he's missed the trap, he jumps high into the air to avoid it, only to disappear down a pothole he hasn't spotted on the other side.
  
  Poor Equitable pensioners are just like this sad sap. For six years they have been buffeted and bruised in the financial equivalent of half a dozen rounds in the boxing ring.
  
  They have had to watch their pensions cut by up to half, which is no fun when you thought you had provided adequately for your wife and yourself in retirement.
  
  It's little wonder they rejoiced when the Prudential offered to take them under its wing.
  
  Everything looked brighter after the deal was done at the beginning of the year. They thought their problems were over. Until that is, their first pension payments began dropping on their doorsteps last week, when they found themselves disappearing down more dark tunnels.
  
  More than 2,000 very frail, elderly policyholders were shocked to see their pensions cut again by up to half. They knew there had to be a mistake, but couldn't get any sense out of anyone……..
  
  It became clear that some had indeed been issued with the wrong coding notices. Worse still, those affected were octogenarians or in their late 70s, many in poor health.
  
  They needed a shock like this as much as they needed a hole through the head. Cutting their pensions in half again left some of them without enough to live on……….Meanwhile, true to form, HMRC refuses to accept there is any problem and maintains that the new tax codes are correct. A spokeswoman said: "The position is quite unclear and we are continuing our investigations. We believe that the codes we issued to these customers were correct. The Prudential doesn't agree. We are continuing to investigate in an attempt to get to the bottom of the matter."
  
  What a pair, eh? Not so much Chaplin and Bean as Laurel and Hardy, and "Here's another fine mess you've gotten me into."
  
  Deaf to criticism:
  
  BACK to banana skins: Pensions Secretary James Purnell found himself sliding around on a veritable grove full when the Court of Appeal delivered its judgment on whether the Government had been justified in turning its back on the victims of company pension scheme collapses and rejecting the Parliamentary Ombudsman's report which found ministers culpable.
  
  To an extent this is all history, because the Government caved in to the victims' demands before Christmas, although we are told that it is not being quite so speedy at coming up with the cash.
  
  Just as well they did, because the Appeal Court agreed with Ombudsman Ann Abraham that the Government was guilty of administration.
  
  However, it is less clear that the Government lost the second part of the case, which related to its right to reject any Ombudsman's findings it doesn't like.
  
  All three sides are closely examining the judgment, and there may yet be an appeal to the House of Lords.
  
  But the point about the Government's right to reject the Ombudsman's findings is important, because we are expecting a highly critical report into the events which brought down Equitable Life before the summer is out.
  
  Given the Government's previous robust defence of its role as regulator to Equitable, we can expect that report to be rejected too.
  
  Which begs the question: why have an independent Ombudsman if the Government can simply bin any reports critical of its activities?”
  
  TERESA HUNTER, Scotland on Sunday, 10th Feb, 2008

• “Government slammed yet again for injustice to pension victims
  Three Court of Appeal judges have today found the Government guilty of misleading 125,000 people about the safety of their pensions making it the sixth judgement against the Government in this matter.
  
  The Court of Appeal has confirmed the Judicial Review victory against the Government of 125,000 workers who lost their occupational pensions when their company schemes were wound up.
  
  The Secretary of State for Work and Pension's appeal against the High Court's ruling that "no reasonable Secretary of State could rationally disagree" with the Ombudsman was dismissed this morning.
  
  The three judges confirmed that the Secretary of State's rejection of the Parliamentary Ombudsman's findings was irrational and unlawful.
  
  It also rules that he must accept that his Department caused injustices which go beyond just financial losses.
  
  The verdict says the Government's maladministration also led to distress, anxiety, uncertainty and lost opportunities to make informed choices about their pensions.
  
  Secretary of state for work and pensions James Purnell intends to appeal against the decision in the House of Lords.
  
  Pensions campaigner Ros Altmann says:
  "We warmly welcome this judgment which, yet again, vindicates our arguments and confirms that the Government misled trusting citizens about the security of their pension savings. But we are astonished that the Secretary of State, James Purnell, wants to appeal to the House of Lords. It is now 6 - nil against the DWP. How many verdicts will it take to make the Government see sense?
  
  "This attitude merely reinforces the High Court and Court of Appeal verdicts that the Government's decisions in this matter are irrational. For the past few years, it has tried, unsuccessfully, to wear us down and even tried to bully the victims into submission, by threatening to bankrupt them if they lost the case."
  
  Nicola York, Money Marketing 7th February, 2008

• “Rebuke for ignoring Equitable Life report. Members of the European Parliament attacked the UK Government yesterday for its failure to respond to the 373-page report on Equitable Life published by the parliament's committee of inquiry last June, which calls for a compensation scheme for policyholders.
  
  "One would think the UK was not a member of the European Union," said the former chair of the committee, the Irish MEP Mairéad McGuiness, as she backed the view of the report's author Diana Wallis, the LibDem MEP, that the government had "failed in its duty of loyal cooperation".
  
  Robert Atkins, a Conservative MEP, described as an "utter disgrace" the Prime Minister's failure even to acknowledge a letter sent to him on the subject on December 6 by the European Parliament's president Hans-Gert Pöttering.
  
  Michael Cashman MEP, deputy chair of the parliament's petitions committee and a confidant of Gordon Brown, called on the UK to agree to implement the recommendations of the Parliamentary Ombudsman, which when finally published may urge a compensation scheme for investors.
  
  Cashman, speaking as the committee reconvened yesterday to try to put pressure on the UK Government, said: "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."
  
  Paul Braithwaite, secretary of Equitable Members' Action Group, which raised the original petition in 2004, told the committee: "It is important to realise that the UK Government is in a legal dispute with the Parliamentary Ombudsman on a matter of great constitutional importance. In essence it has argued that the role of the PO is merely advisory to government ministers and that the findings cannot be binding'."
  
  He added: "Equitable sufferers are understandably embittered at the stark contrast between their quest for justice, which remains unaddressed after seven years, and the protection of Northern Rock's investors having been set up within seven days."
  
  Simon Bain in The Herald, January 25 2008

• “Europe loses patience over Equitable Life
  The European Parliament is to revisit its inquiry into Equitable Life next week in an attempt to force a response from the UK government on the EU's call for policyholder compensation.
  
  Equitable Members' Action Group (EMAG), which prompted the first EU inquiry of its kind in a decade in 2006, has been invited to address the parliament's petitions committee next Wednesday as the parliament seeks to assert its authority……
  
  It is seven months since the European Parliament overwhelmingly endorsed the report, which called on the UK government to accept responsibility for the insurer's near-collapse in 2000.
  
  Paul Braithwaite, secretary of EMAG, commented: "The Brussels parliament has waited patiently and then rather less patiently and is now being infuriated probably because of renewed concern about Northern Rock, which demonstrates that the British single regulator clearly doesn't work."
  
  MEPs voted last June by 602 to 13 to approve their report which called on the government to set up a compensation scheme for up to one million policyholders who lost money due to regulatory failure. Although most affected policyholders are in the UK, there were victims in 15 of the EU's 27 states, including 8000 policyholders in Ireland and 4000 in Germany.
  
  It emerged last week that on December 5 the President of the European Parliament, Hans-Gert Poettering, wrote to Gordon Brown to express his concern about the lack of a formal response to the report, a letter which has yet to receive a formal reply.
  
  Poettering says in his letter that the report "requires explicitly the government of the United Kingdom and the regulatory and supervisory bodies to ensure that the conclusion and recommendations of the inquiry are acted upon".
  
  He goes on: "I understand, however, that the European parliament has, as yet, received no response to this request and that your government has stated in the press that it will await the outcome of a separate national (parliamentary) ombudsman procedure before responding "Given the date by which the ombudsman is scheduled to report, the parliament finds itself faced with the prospect of having to wait more than a year between its resolution and any formal response from the government most concerned by it.
  
  "I would like to ask you to look into this issue and act in a way which will ensure that the authority of the parliament and of its right of inquiry enshrined in the EC Treaty do not risk being prejudiced by the lasting lack of a formal response by the British government." Diana Wallis, the LibDem MEP who led the writing of the report, commented last night: "We are trying to inject some urgency into getting a response from the British government.
  
  "We had a full response from the European Commission, we have had nothing from the government, not even an acknowledgment."
  
  The 373-page EU report said regulators had "behaved with undue awe or deference towards Equitable Life and apparently believed (it) to be too good and too reputable to make mistakes". This had exacerbated a "weak regulatory environment, which allowed the difficulties at Equitable Life to grow unchecked"…………
  
  Since the publication of the EU report after a 15-month inquiry, to which The Herald submitted evidence in Brussels, the government has said it cannot respond until parliamentary ombudsman Ann Abraham has produced her report on the saga.
  
  However, Abraham's report has been delayed by at least a year by the late arrival on her desk of a huge quantity of submissions by the Treasury and Financial Services Authority……..
  
  SIMON BAIN in The Herald, 17th January 2008

• “EU pressure on Brown over Equitable row.
  Gordon Brown has been chided by the president of the European parliament over the British government's failure to respond to a highly critical report demanding compensation for Equitable Life policyholders.
  
  It emerged today that Hans-Gert Poettering wrote personally to the prime minister to express his concern about the lack of a formal response to the European parliament report, which received the backing of an overwhelming majority of MEPs in June last year.
  
  Campaigners said Brown risks a fresh row with his European counterparts because it is understood that Poettering is still awaiting a reply to his letter, even though it was sent on December 5 and concluded: "I look forward to hearing from you as soon as possible." The letter was passed to the Treasury, which intends to respond to it during the next few days. Equitable Life shut its doors to new customers in 2000 and later repeatedly slashed the value of a million policyholders' investments after it lost a legal battle involving guaranteed annuity rates, sold as part of pension plans. In 2006, the European parliament launched a formal investigation into the British government's role in what went wrong.
  
  A committee of inquiry produced a report which called on Britain to set up a compensation scheme for policyholders who lost money, and contained recommendations aimed at ensuring that such a scandal could never happen again. MEPs voted by 602 to 13 to approve the report. But campaigners have been frustrated by the government's refusal to issue a response, and Poettering wrote to the prime minister to say that the report "requires explicitly the government of the United Kingdom and the regulatory and supervisory bodies ... to ensure that the conclusion and recommendations of the inquiry are acted upon." He added: "I understand, however, that the European parliament has, as yet, received no response to this request and that your government has stated in the press that it will await the outcome of a separate national [parliamentary] ombudsman procedure before responding ...
  
  Given the date by which the ombudsman is scheduled to report, the parliament finds itself faced with the prospect of having to wait more than a year between its resolution and any formal response from the government most concerned by it. "I would like to ask you to look into this issue and act in a way which will ensure that the authority of the parliament and of its right of inquiry enshrined in the EC Treaty do not risk being prejudiced by the lasting lack of a formal response by the British government."
  
  UK MEP Diana Wallis said it was "immoral and illegal" for the government to leave so many Equitable policyholders without a remedy, while the Equitable Members Action Group claimed ministers had shown "flagrant contempt".
  
  The Treasury said it was unable to say very much until the completion of the parliamentary ombudsman's report into the debacle, due later this year.
  
  Rupert Jones in The Guardian 10th Jan, 2008

• “Equitable accused of fund 'fire sale'
  EQUITABLE Life campaigners have condemned as a "fire sale" plans to sell the rump of the troubled fund, bringing more uncertainty and worry for 500,000 investors this Christmas.
  
  Paul Braithwaite, of the Equitable Members Action Group, said: "Plans to hive off Equitable's remaining policyholders are entirely predictable. This is a fire sale, designed to nail the coffin of this troubled company before the Parliamentary Ombudsman delivers her report next summer.
  
  "But investors should be careful what they wish for. If it goes into one of the zombie funds, they will treat these policies as milch cows and consumers may be no better off."
  
  Equitable members are used to bad news. What was considered the UK's finest insurance company closed in 2000, after a House of Lords ruling forced it to pay pension guarantees it could not afford.
  
  Members saw the value of their policies cut twice: first in 2001 by 16% and then again in 2002 by 10%.
  
  In addition, that year chief executive Charles Thomson switched the stricken fund out of equities and into lower-risk fixed interest gilts, which meant members missed out on the gains enjoyed elsewhere as share prices soared.
  
  The firm has shrunk from £26bn to £7bn as investors have fled. Canada Life bought the annuities book in February and the Prudential is due to take over the with-profits annuities policies on December 31.
  
  Chairman Vanni Treves plans to put the remainder of the business up for sale in the new year in an attempt to improve investment prospects for investors. He indicated he had already received tentative approaches…………
  
  Laith Khalaf, Hargreaves Lansdown's pensions analyst, argues that everything will depend on the financial strength of the acquirer…….
  
  "But if it goes into one of the consolidation or zombie companies, or any other company without a strong equity-asset mix, then it is unlikely that things will improve."
  
  A report into the failure of Equitable by Parliamentary Ombudsman Ann Abrahams is due before June after a number of delays.”
  
  Teresa Hunter, The Scotsman 23rd December, 2007

• “The long wait for justice at Equitable Life:
  Ann Abraham, the Parliamentary Ombudsman, has just updated the battered and bruised policyholders of Equitable Life about the progress of her long-awaited report into the suspect regulation of the mutual before it hit the rocks in late 2001.
  
  Like all Abraham's previous progress reports on Equitable Life, it is not good news, just confirmation of yet more frustrating delays.
  
  As yet there is not a sniff of the £4bn of compensation that some policyholders are hoping Abraham will recommend the Government pays - for idly standing by and allowing people to continue to take out policies with the mutual in the late 1990s when it knew Equitable was teetering on the edge.
  
  Her update, itself more than a month overdue, tells policyholders that her report is not likely to be published until next summer at the earliest. But given that the report must be presented to Parliament - whose members spend most of the summer on holiday - I wouldn't be surprised if it doesn't see the light of day until October 2008.
  
  And given that Abraham's original plan, when she announced she would be conducting the inquiry in July 2004, was to publish within a year, it is not surprising that many policyholders campaigning for compensation are becoming increasingly agitated over the delay.
  
  Abraham cannot take all the blame for the tardiness in completing this report. She put together a draft in January this year which she duly sent - as she is required to do - to the Financial Services Authority, the Treasury and the Government Actuary's Department for comment. It is these three public bodies whose actions Abraham is investigating.
  
  What she could not have anticipated was a joint response 500 pages long. It is the length of this response - a deliberate exercise in tying Abraham up in knots - that has stalled her.
  
  Having now adapted her report in light of these comments, Abraham will soon send it out to complainants for their say. She will then start preparing her final report.
  
  Let's hope that when she can eventually publish her findings over regulatory failure at Equitable Life, it is worth reading.
  
  A lot of customers, horribly wronged, are relying on this stoic woman to see justice prevail. It would be a travesty if the report ended up no more than a fudge.
  
  Jeff Prestridge, Mail on Sunday, 9th December, 2007
  Financial Mail Personal Finance Editor

• Ex-MPC man slates Brown on Rock 'shambles'
  
  Gordon Brown must take a major slice of the blame for the Northern Rock "shambles", one of the Prime Minister's previous appointees to the Bank of England will claim today.
  
  Ex-MPC man slates Brown on Rock 'shambles' Prof Buiter warns that the UK's 'light-touch regulation needs to be tightened up'
  
  In his appearance before the Treasury Select Committee, leading economist and former Monetary Policy Committee member Willem Buiter will blame Mr Brown's decision to hive off the key regulation role from the Bank to the Financial Services Authority for creating the foundations for Northern Rock's downfall.
  
  He will call for the Bank of England to be reinstated as the chief banking supervisor and regulator, and argue that the MPC should be made independent of the Bank.
  
  Prof Buiter, who is now at the London School of Economics, also warns that the UK's "light-touch regulation has become 'soft-touch' regulation and needs to be tightened up in a large number of areas". In a submission to the Committee, he claims that not only was the new architecture of the financial system, put into place by Mr Brown when he became Chancellor in 1997, flawed but that the Bank acted indecisively, and that the crisis undermined its credibility. Northern Rock was not "too large to fail", he says.
  
  However, it is the accusation of the Prime Minister over his part in the disaster that will attract most attention, since Prof Buiter was one of the first economists to be appointed to the MPC by Mr Brown in 1997.
  
  His submission said: "The Tripartite arrangement between the Treasury, the Financial Services Authority and the Bank of England for dealing with financial instability is flawed. Responsibility for this design flaw must be laid at the door of the man who created the arrangement – the former Chancellor and current Prime Minister, Gordon Brown."
  
  He said the main shortcoming was that it separated the information about individual troubled banks from the agency with the financial resources to help them.
  
  "It's clear this separation of information and resources does not work," he said.
  
  He said that, in any case, Northern Rock should have been allowed to "sink or swim", but that the Government should have guaranteed all deposits. Instead, he said, two months after it was granted liquidity support by the Bank and customers' deposits were guaranteed, "Northern Rock is still on life support, having drawn over £20bn from the liquidity support facility – just under 20pc of its assets. This is a shambles".
  
  He said the authorities' actions meant "the UK has socialised all risk to both sides of the banking sector balance sheet".
  
  He added: "It is hard to argue that the survival of Northern Rock is necessary to avoid a genuine threat to the stability of the UK financial system, or to avoid a serious disturbance to the economy. The bank is not 'too large to fail'."
  
  He said it would even have been preferable to have taken Northern Rock into public ownership.
  
  "The way the crisis unfolded damaged the prestige and international standing of the City of London – the financial capital of the world – more than the other leading financial centres," he said.
  
  Prof Buiter also warned that ratings agencies had been subject to "multiple potential conflicts of interest" and questioned the wisdom the Federal Reserve's interest rate cuts.
  
  He said that since the original credit crunch was partly caused by "ludicrously complex" debt instruments, regulators and investors would now have to demand simpler structures.
  
  Daily Telegraph, by Edmund Conway, Economics Editor
  13th November 2007

• “Gordon Brown is feeding you porkies
  
  "Misleading people". That was the accusation levelled by Gordon Brown at the leader of Her Majesty's Opposition. This was akin to Paul Daniels complaining that his rivals use sleight-of-hand to fool the audience.
  
  When it comes to misleading, Brown is the boss. He is Marvo the Misleader, the Daddy of Dissemblance. Where others employ fake magic, Gordon's trickery is real: successes appear from nowhere; failures vanish.
  
  If misleading were ever to become an Olympic sport, Brown would win more gold medals than Mark Spitz. For him, statistics are not facts; they're the perquisites of office. Numbers don't matter; it's the message that counts.
  
  Even the allegation that David Cameron had misled people, which caused such a rumpus in the Commons, was misleading. Cameron is no stranger to inexactitudes, but for once his charge that the Government had been nailed – in this case, over ballot-paper chaos in Scottish elections – was spot on.
  
  The Gould report into the Holyrood shambles concluded that the Scotland Office and the Labour-led Scottish Government had frequently focused on "partisan political interests", resulting in nearly 150,000 wasted votes.
  
  In Brown's bulging sty of porkies, his latest swipe at Dave was a piglet, a runt in the litter of liaisons with falsehood. But it was symptomatic of the quality of communication between officialdom and electorate: utterly dire.
  
  Whether it's on crime, education, taxation, truancy, health, child poverty, public finances, economic growth rates, domestic elections, the European treaty (aka constitution) or the most obscene distortion of all, weapons of mass destruction, almost nothing we are told seems to bear scrutiny.
  
  When examined closely, time and again, there are omissions and distortions, fudge and mudge. Veracity exists, but only as a theoretical concept – nowhere more so than in the emotionally charged debate on immigration.
  
  Yesterday's Today programme provided another striking example of how forces of fantasy are twisting the facts. Figures from the Office for National Statistics suggest that the population of Slough is decreasing. For those who live in this immigration hot-spot, that's an incomprehensible mistake.
  
  Slough council's chief executive Ruth Bagley said official estimates were "significantly out of step" with real population growth. As a result, the town suffers a £1 million annual shortfall in Government funding. She added that many other local councils are facing similar difficulties.
  
  Having, in effect, destroyed Britain's border controls, Labour's position is to keep asserting that immigration benefits everyone. A bit like vitamins: the more we take, the better off we are. Except, just like vitamins, that's not true. There comes a point when too much of a good thing chokes the system.
  
  We were told by Labour - dishonestly - that 13,000 immigrants would arrive here from the EU's new Eastern European members. At least half a million have turned up and more are on their way.
  
  Instead of admitting the problem and dealing with it, the Government tries to dress it up as a brilliant manoeuvre to solve our pensions crisis and make us richer.
  
  A recent study claims that immigrants contributed £6 billion to the economy last year. That may be correct, but it does not mean that we're all better off. It's not the size of the national pie, but the slice that each of us gets that matters. Immigrants don't just help pay for the pie, they also eat it.
  
  Setting aside cultural tensions, such as the unwillingness of some immigrant groups to assimilate, a vast discrepancy in employment rates (Nigerians are 76 per cent in work, Somalis 19 per cent) and the pressure that a population boom puts on domestic infrastructure, including schools, housing and transport, there has been a deliberate attempt by Government to over-state the economic benefits of allowing a crowded island to fill up even more.
  
  Bob Rowthorn, professor of economics at Cambridge University, strips bare this deception in an analysis for the Telegraph's website: "We need an honest immigration debate." I commend it to you.
  
  He summarises: "The additional amount [of GDP] produced by immigrants has been smaller than the number of people they have added to the population. The conclusion is inevitable: the result of immigration since 1998 has been to lower per capita GDP, or output per individual worker, not to increase it."
  
  Rowthorn describes Government assertions to the contrary as "profoundly misleading". Sadly, much else of what we are fed by ministers and their mouthpieces falls into the same box. They seem happy to perform intellectual gymnastics in order to vault over the hurdles of honesty and clarity.
  
  Not content with injuring truth, Brown insults our intelligence by promising "British jobs for British workers". If an employer produced a similar slogan, it would almost certainly be prosecuted for discrimination.
  
  Even the Prime Minister's supporters know that he cannot deliver this. If he could, more than five million British adults would not be living on welfare payments. It explains why Brown only ever shouts about Britain having more people in employment than ever before, never highlighting how many of these are not British.
  
  Tony Whatisname's truth-bender-in-chief, Alastair Campbell, says a cynical press is poisoning democracy. In fact, we have not been cynical enough (I too believed the scare stories about WMD). As a result, Labour has got away with murder.
  
  Brown has a reputation for being formidably clever. Perhaps this is why he treats the rest of us as if we were graphically stupid. How else can we explain his expectation that the public will keep swallowing fiction as fact?
  
  His final act as chancellor was to boast of a tax-cutting budget. Except it wasn't. City economists quickly worked out that the tax bill had risen.
  
  Crime, we are told by the Home Office, is going down. Maybe. But violent crime, according to the Centre for Crime and Justice, has been going up.
  
  Results from state education are soaring, says Downing Street. Strange, then, that there is a stampede into private schools and our best universities are being bullied into admitting comprehensive pupils with inferior grades.
  
  The "red lines" that Brown claims to have secured in the EU "treaty" are illusory. The document is 96 per cent the same as the constitution that was roundly rejected by the French and Dutch in 2005.
  
  He refuses a referendum because he doesn't trust the people. He believes (or does he?) that he knows best. He's a "listening" leader who refuses to hear what he doesn't like.
  
  There is to be no election this year. Why? Brown says because he wants to show the people what he can do. More codswallop. He was terrified of losing.
  
  Finally, there's the claim that, having had his hands on just about every lever of power for 10 years, the Prime Minister wants to sanitise grubby politics. Gordon Brown, an agent of change? The biggest lie of all.
  
  Daily Telegraph, Jeff Randall 26th October, 2007

• “The emperor's new clothes. EVERY politician knows the cautionary fable: the vain emperor who kept on buying new clothes, who was eventually sold an imaginary new suit—and who was suddenly and publicly revealed to be worryingly short of substance. So how on earth did Gordon Brown, one of the canniest operators in British politics, end up seeming so naked?
  
  The brief history of his premiership now looks rather like Hans Christian Andersen's exercise in groupthink. Since he took over from Tony Blair in June, Mr Brown has dressed himself in a whole wardrobe of different political costumes. Borrowing the traditional garb of the opposition Conservatives, he has appeared as a stout patriot and hammer of criminals and foreigners. In his preacher's cassock, he has frowned on drugs, drink and gambling. Above all, he has striven—until this week, successfully—to portray himself as principled, strong and serious, in supposed contrast to Mr Blair. The reasonably competent management of several minor crises reinforced his gravitas. He seemed to have pulled off an impressive confidence trick, persuading voters that his was a new administration, rather than the continuation of Mr Blair's, throughout whose ten years Mr Brown was second-in-command….
  
  The imperial pomp was shattered by a decent speech by David Cameron, the Conservative leader, and by a salvo from George Osborne, the impish shadow chancellor. Mr Osborne pledged that a future Tory government would dramatically raise the threshold above which inheritance tax is levied. Suddenly the polls, especially in marginal constituencies, looked less rosy for Mr Brown. The prime minister announced that there would be no early vote after all. But he admitted he had thought about one, contradicting his previous insistences that he was focused wholly on governing. Worst of all, he insulted voters' intelligence by denying the blindingly obvious—that the adverse polls had swayed his decision.
  
  Now Mr Brown seems less strong and serious than weak and spinning. A visit he made to Iraq in advance of the phantom election campaign seemed to exploit Britain 's armed forces for party advantage: the emperor of Downing Street , like the one in the fable, now stands accused of caring more for his image than for his soldiers. Meanwhile, his political underwear—his broadly successful stewardship of the economy has begun to look skimpy…….
  
  Mr Cameron is still underdressed; but he now has a couple of years to change that impression. Mr Brown does not. Ironically, one of the many excuses he gave for his election retreat—he wants more time to set out his “vision” for Britain —has a core of truth. So far, it is not at all clear how that vision is distinctive, beyond the laudable but universal aims of alleviating poverty, improving schools and hospitals and reinforcing meritocracy. Indeed, immediately after the climbdown, Mr Brown reverted to his costume-changing ways, hastily adopting a version of the Tories' inheritance-tax proposal and pilfering ideas on taxing aviation and offshore wealth.
  
  To more guffaws from the crowd, the government claims this had always been in their thoughts……………….
  
  Silly as he now looks, it is too early to write Mr Brown off. There is a way out of this mess, which is to govern well. With the election shelved, he must concentrate on actually doing the job he coveted for so long—and which he may end up holding for much less time than once seemed likely. He must stop trying to bedazzle, and stand before the public in his true political clothes. Assuming, of course, that he has some.”
  
  The Economist’s editorial, 11th October, 2007