Equitable Life victims should be fully compensated by the UK government, according to a Conservative MEP.
"I believe that due to its failure to adequately protect policy holders in accordance with EU legislation, the UK government is obliged to devise an appropriate scheme to ensure full compensation for victims of the debacle," says Sir Robert Atkins, Tory MEP and member of the Euro Committee of Inquiry into the collapse of Equitable Life.
The 22-strong committee of MEPs was set up in February 2006 to assess allegations UK regulators failed to protect policy holders.
The committee is voting today to back a special report which criticizes the “light touch” UK regulatory regime and accuses the Financial Ombudsman Service (FOS) of "serious shortcomings" in handling the Equitable Life affair.
The report was written by Diana Wallis, Liberal Democrat MEP and Rapporteur of the committee.
The 373-page report also severely criticises the Financial Services Authority (FSA), the Treasury and the Department of Trade and Industry, for its “excessive leniency” towards Equitable’s solvency margins.
"Having categorically proven that the UK and EU financial redress systems are unsatisfactory and lack the requisite level of security that one would expect from the single market, the EU institutions and British government must urgently combine forces to ensure that higher standards of investor protection and security are legally enforced,” Atkins says.
“This is imperative if people are to be expected to save judiciously for their retirements."
The European Parliament inquiry followed a 2004 report by Lord Penrose, which described Equitable Life as the "author of its own misfortunes" and said over-generous payouts to policyholders had created a financial black hole amounting to billions of pounds. Lord Penrose also criticised the way the company was regulated.
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