action groups want new parliamentary ombudsman to extend inquiry into pensions debacle
Seven of the Equitable Life action groups have joined forces, calling for changes to the investigation of the Parliamentary Ombudsman into Equitable Life and Government compensation.
The action groups, calling themselves E7, united to call for the new Parliamentary Ombudsman, Ann Abraham, to broaden her investigation.
Paul Braithwaite, the group spokesman, said: 'As things stand, just one case relating to 1999/2000 is being evaluated. E7 wants the Parliamentary Ombudsman's office to commit to addressing the other 250 cases of claimed maladministration already lodged by MPs, going back to 1994 and beyond.'
Braithwaite added that international comparisons of the way the Equitable Life crisis has been handled do not match up. He continued: 'America has shown how huge financial scandals can and should be addressed ' swiftly, independently and honestly.'
A dozen committee members from the seven action groups met with 15 opposition MPs outside the Commons recently to lobby for action and act as a reminder that both the Parliamentary Ombudsman's office and Lord Penrose have been working on reports for a year with no visible progress.
'A year ago, the minister, Ruth Kelly, knocked Equitable Life into the long grass by announcing the far from independent Penrose Inquiry, with a totally toothless remit,' Braithwaite said. 'It has since been used by the Treasury and, disgracefully, the Treasury Select Committee, as an excuse to do nothing
'It is unlikely MPs or policyholders will see any version of Lord Penrose's report before 2004.'
Braithwaite met Lord Penrose recently as part of an ongoing dialogue with the inquiry chairman but refused to discuss what had been said. However, he did say the E7 group will be finalising its response to the Penrose inquiry within the next month.
Now the E7 group is accusing the Treasury of orchestrating a cover-up, with delays and deliberate attempts to ringfence the regulatory problem to a brief period in order to distract from what they believe is the Treasury's culpability for regulatory failure pre-dating 1999.
'Equitable policyholders are fed up with being fobbed off with a shabby establishment cover-up,' Braithwaite said.
The E7 group believes in the two years since Equitable closed to new business, policyholders have suffered write-downs to their policies of more than £3bn ' about one third of each policy's value. E7 claims this was not related to the stock market crash but was due to over-distribution of bonuses that went endorsed and unchecked by regulators throughout the 1990s.
There is also concern Equitable policyholders receiving compensation have been asked to sign non-disclosure agreements. One intermediary said this had happened to one of his firm's clients. The client is still not happy with his treatment by Equitable Life, he added, and had complained to the Financial Ombudsman Service.
Equitable Life timetable of events
• 1950s Equitable starts selling policies with guaranteed annuity rates (GARs).
• 1993 Market annuity rates fall below Equitable's GAR.
• Jan 1994 The society announces plans to cut its final bonus rates on GAR policies.
• July 2000 The House of Lords rules that Equitable cannot cut GAR rates, forcing Equitable to put itself up for sale.
• December 2000 After failing to find buyer, Equitable closed to new business.
• Feb 2001 Equitable sells bulk of its assets not related to with-profits fund to Halifax for £500m.
• July 2001 Equitable reduces 31 December 2000 policy values of with-profits policies by 16%, with-profits life assurance by 14%.
• August 2001 Penrose enquiry launched.
• July 2002 Equitable ups exit penalties to 20%.
Source: Investment Week
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