Profile on EMAG's Paul Braithwaite in the Herald

IN the storms surrounding Equitable Life and now Standard Life, the siren voices of policyholder activists have been increasingly heard to chilling effect.

Chief among them is Paul Braithwaite, a successful entrepreneur in his own right, secretary of the professional-backed Equitable Members Action Group, and a fearless critic of Standard's board at the past three annual meetings.

"Shame on you," Braithwaite cried at Standard's non-executive directors at last Tuesday's turbulent meeting in Edinburgh, echoing the feelings of a large swathe of absent policyholders and drawing warm applause. "I don't trust this board to take decisions with due regard to policyholders' best interests."

Braithwaite's proposal that the board co-opt himself and consulting actuary Ronnie Sloan as member representatives was, of course, brushed aside by chairman Sir Brian Stewart, who said Standard's governance was "entirely comparable with anything that is done in a plc". But the advice, warnings and cajolings of articulate and well-informed members have proved alarmingly prophetic for both Standard and Equitable over the past three years. Braithwaite's brazen but brave call at last year's meeting for the resignation of Iain Lumsden was arguably vindicated when Lumsden quit in January.

"For the first time we have instant electronic and free communication and dissemination," Braithwaite said at a snatched lunch close to Edinburgh's conference centre on Tuesday. "The Motley Fool discussion board on Equitable Life has now had 47,000 posts, and the regular posters and regular readers are, I am certain, better informed than the non-executive directors, and certainly better informed than the regulators."

He adds: "Unfortunately there is an infuriating feudal respect amongst British investors to assume that the board is benign and acting in their best interests."

Braithwaite, 57, left Saatchi & Saatchi 12 years ago to start his own business, Leisure Advertising, and is non-executive chairman of a successful company which has opened two "fun learning" shops in London's biggest shopping centres and plans a third. He began saving for a pension with both Standard and Equitable 20 years ago, adding four other non-mutual company plans along the way. "At one time my accumulated funds were probably in excess of £400,000 across the board but they have been steadily eroding whilst I continue to add payments ... along with millions of others who thought they were making prudent provision."

His crusading zeal was fired by "sheer anger at the abuse by non-executives" in allowing Equitable "to pass from one autocratic regime to another". He claims: "Every single member of Vanni Treves' board is beholden to him for their position." After standing twice for Equitable's board, he offered his services as paid consultant and secretary to the Equitable Members Action Group, which pays him a non-executive director fee for "supposedly half my time, but I put in about 70 hours a week".

Emag has so far spent £70,000 on legal and professional advice, including reports from consultant Ned Cazalet, academic Professor David Blake, and most impressively from accountants Burgess Hodgson which accurately anticipated Lord Penrose's analysis of Equitable's "over-bonusing" a year before he reported. It submitted huge amounts of original research to Penrose, though only one contribution, from member Sir Jeremy Lever QC, was acknowledged in the report.

"We think we have produced stunningly helpful work from a policyholder perspective," says Braithwaite.

Emag has lodged a special resolution for next month's annual meeting, backed by more than 1000 members, asking for the board to put £2m behind Emag's campaign to force the government to pay compensation. It has written to Equitable's chairman Treves asking for a meeting to discuss the resolution, the potential for a legal challenge to the government in Brussels, and Emag's application for judicial review of the report by the Parliamentary Ombudsman, widely regarded as inaccurate and inadequate.

But Braithwaite is not hopeful of constructive engagement. "At one of the investor roadshows which I attended, someone asked Treves whether he was going to give action groups the attention they deserved. His answer was 'now I am here policyholders no longer need ginger groups'." He cites Penrose's complaint that mutual boards have been "self-serving oligarchies" and says of member activism: "Equitable has 300,000 voting members and Standard has 3.6 million. It is partly the disinformation machine that Standard has put in place over the last four years that has led people to sit in their seats whilst five cuts have been foisted on them. OK, if the policy is maturing this year after 25 years the results are pretty good, but we are really cruising on the performance from decades ago."

He adds: "All of the signals that I had observed in Equitable Life in 1999 to 2000 seemed to be repeating themselves in Standard Life, with its macho culture also dominated by actuaries who had gone native. They had got into the cult of the equity in a way that scared me to death. I don't think the customers of Standard Life have had any idea of the risks that Standard Life has been gambling."