The Treasury, via Yvette Cooper the Chief Secretary, issued an apology to the long suffering Equitable Life victims.
Quote:
"I think the whole House regrets the mismanagement of the society. I wish to apologise to policyholders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place."
However, there will be no compensation merely some possible payments to those who have suffered "disproportionately" (whatever "disproportionately" really means).
Those policyholders who are hooping that they may receive some form of payment need to be aware that the Treasury's game plan is very obvious:
- Delay
- Delay
- Delay
The objective being to offload the problem into the hands of the next government (unlikely to be Labour) after 2010, and to ensure that as many policyholders as possible have died of old age before any payment is finally agreed.
Showing posts with label Equitable Life. Show all posts
Showing posts with label Equitable Life. Show all posts
Friday, January 16, 2009
Monday, July 21, 2008
An Inequitable Life
Following on from the recent report by Ann Abraham, the parliamentary ombudsman, in which she called for compensation for more than a million policyholders in Equitable Life there are now concerns that more than half of them may in fact get no compensation at all.
The Equitable Members' Action Group (Emag) has estimated that the cost of compensation could be around £4.6BN.
Many thousands of Equitable savers have gone through the Financial Ombudsman Service (FOS) to claim compensation for mis-selling. However, only 50% to 60% received any.
Given this, and the fact that the Treasury will not respond to the report until the autumn, it is unlikely that all the policyholders are going to come out of this scandal with the result that they would wish for.
Emag has threatened a judicial review in autumn, if the government does not satisfy them.
This will be a long battle, by which time many of the policyholders may well have died.
The Equitable Members' Action Group (Emag) has estimated that the cost of compensation could be around £4.6BN.
Many thousands of Equitable savers have gone through the Financial Ombudsman Service (FOS) to claim compensation for mis-selling. However, only 50% to 60% received any.
Given this, and the fact that the Treasury will not respond to the report until the autumn, it is unlikely that all the policyholders are going to come out of this scandal with the result that they would wish for.
Emag has threatened a judicial review in autumn, if the government does not satisfy them.
This will be a long battle, by which time many of the policyholders may well have died.
Thursday, July 17, 2008
Apology Demanded
Ann Abraham, the parliamentary ombudsman, in a long delayed report has called for Britain to apologise to more than a million policyholders in Equitable Life and offer them compensation.
The apology, not that it will ever come, will be a tad late as the Equitable Life scandal occurred in 2000.
Equitable Life almost collapsed in 2000, after being forced to honour unsustainable guarantees stretching back 30 years. It eventually closed to new business in one of Britain's most dramatic financial scandals.
Ms Abraham has been investigating the scandal for four years, and is quoted in The Guardian:
"(Those) responsible for undertaking financial regulation should act in a way that is compatible with the duties and powers which parliament has conferred on them.
Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report."
Vanni Treves, who became chairman of Equitable Life in 2001, said that the regulators' failure to tackle problems at the society meant the government should compensate policyholders who suffered losses as a result.
"Year after year, the regulators failed to do anything about problems that were absolutely evident to them.
We have paid all the bills we felt we had a duty to pay. Now the government must pay the bills for its own failures."
Abraham noted that the bodies overseeing the insurer were "passive, reactive and complacent", allowing one person to be both chief executive and appointed actuary for more than six years thereby neutralising the appointed actuary's "whistle-blower" role.
Abraham's report recommended a compensation scheme to redress losses, and called on the government to act swiftly, as tens of thousands of policyholders have already died since Equitable Life closed to new business.
The FT estimates that the cost of compensation will be around £4BN.
It is all very well calling for compensation. However, there are two issues that will ensure none is given:
1 The government is broke and cannot afford to pay any.
2 The regulatory regime that failed the policyholders was set up by Gordon Brown, to pay compensation would be an admission of failure. Brown does not do "failure" or "apologies".
Given the recent financial scandals, eg Northern Rock, it is evident that the regulatory regime in the UK has not improved one jot since the days of Equitable Life.
There are other scandals waiting to break.
The apology, not that it will ever come, will be a tad late as the Equitable Life scandal occurred in 2000.
Equitable Life almost collapsed in 2000, after being forced to honour unsustainable guarantees stretching back 30 years. It eventually closed to new business in one of Britain's most dramatic financial scandals.
Ms Abraham has been investigating the scandal for four years, and is quoted in The Guardian:
"(Those) responsible for undertaking financial regulation should act in a way that is compatible with the duties and powers which parliament has conferred on them.
Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report."
Vanni Treves, who became chairman of Equitable Life in 2001, said that the regulators' failure to tackle problems at the society meant the government should compensate policyholders who suffered losses as a result.
"Year after year, the regulators failed to do anything about problems that were absolutely evident to them.
We have paid all the bills we felt we had a duty to pay. Now the government must pay the bills for its own failures."
Abraham noted that the bodies overseeing the insurer were "passive, reactive and complacent", allowing one person to be both chief executive and appointed actuary for more than six years thereby neutralising the appointed actuary's "whistle-blower" role.
Abraham's report recommended a compensation scheme to redress losses, and called on the government to act swiftly, as tens of thousands of policyholders have already died since Equitable Life closed to new business.
The FT estimates that the cost of compensation will be around £4BN.
It is all very well calling for compensation. However, there are two issues that will ensure none is given:
1 The government is broke and cannot afford to pay any.
2 The regulatory regime that failed the policyholders was set up by Gordon Brown, to pay compensation would be an admission of failure. Brown does not do "failure" or "apologies".
Given the recent financial scandals, eg Northern Rock, it is evident that the regulatory regime in the UK has not improved one jot since the days of Equitable Life.
There are other scandals waiting to break.
Friday, June 22, 2007
EU Condems Government Role in Equitable Life Crisis
The EU will today savage the government's handling of the Equitable Life crisis, and its failure to protect Equitable Life policyholders.
Equitable Life had to close to new business in 2000, after it emerged it could not honour its policies; it went on to dramatically cut the value of customers' life savings, leaving many thousands of policyholders in deep financial trouble.
Today's report marks the culmination of an 18 month inquiry by the European parliament in Equitable Life, and will call for government compensation for the many thousands of investors who lost part or all of their savings and pensions when the company ran into trouble.
The report castigates the government's "light touch" approach to regulating the life insurance business, especially Equitable Life, which was seen by the authorities as "too reputable" to run into trouble.
The report notes that the UK's light touch:
"went a step too far and thereby contributed to a weak regulatory environment, which allowed the difficulties at Equitable Life to grow unchecked".
The report then states:
"There have been a significant number of statements to the effect that the UK regulators failed to prevent Equitable Life from steering into its crisis, and therefore failed to protect policyholders in the UK and other member states from suffering financial losses as a direct consequence.
It is also apparent that the UK regulators behaved with undue awe or deference towards Equitable Life, particularly given its long history and hitherto highly reputable status, leading them to consider it as the top pick of the life insurance industry and apparently believed to be too good and too reputable to make mistakes.
In view of the UK government's failure to comply with the requirements of the (EU's) third life directive, and given the absence either of accessible legal redress through the courts or of effective alternative means of redress, the committee firmly believes the UK government is under an obligation to assume responsibility.
The committee therefore strongly recommends the UK government devise and implement an appropriate scheme with a view to compensating Equitable Life policyholders within the UK, Ireland, Germany and elsewhere."
Unfortunately, for the long suffering policyholders, the committee cannot order compensation. However, the report's author, Liberal Democrat MEP Diana Wallis, said:
"For the victims of the Equitable Life failure, the report delivers an analysis of the UK's flawed process of implementing EU law which, combined with the imminent report of the UK parliamentary ombudsman, should arm the victims with powerful findings," she said.
It is absolutely critical to the future of the pension industry and to all of us as savers and people who hope eventually to see our retirement, that there is confidence in this sector. I hope our report will assist that process."
Tory MEP Robert Atkins, an inquiry committee member, is quoted in The Guardian as saying:
"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.
Having categorically proven that the UK and EU financial redress systems are unsatisfactory and lack the requisite level of security 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.
This is imperative if people are to be expected to save judiciously for their retirements."
There will also be a report from the UK parliamentary ombudsman, Ann Abraham, on the Equitable collapse. However, as befitting the "speed" of government processes (doubtless to ensure that Equitable has long been forgotten), this report will not be issued until October at the earliest.
Too little too late for the 1 million policyholders affected by the Equitable scandal.
Maybe they should consider launching a class action?
Is it any wonder that people do not bother to save for their retirement?
How can anyone possibly trust the pensions industry, or the government, to look after their money or their future?
Equitable Life had to close to new business in 2000, after it emerged it could not honour its policies; it went on to dramatically cut the value of customers' life savings, leaving many thousands of policyholders in deep financial trouble.
Today's report marks the culmination of an 18 month inquiry by the European parliament in Equitable Life, and will call for government compensation for the many thousands of investors who lost part or all of their savings and pensions when the company ran into trouble.
The report castigates the government's "light touch" approach to regulating the life insurance business, especially Equitable Life, which was seen by the authorities as "too reputable" to run into trouble.
The report notes that the UK's light touch:
"went a step too far and thereby contributed to a weak regulatory environment, which allowed the difficulties at Equitable Life to grow unchecked".
The report then states:
"There have been a significant number of statements to the effect that the UK regulators failed to prevent Equitable Life from steering into its crisis, and therefore failed to protect policyholders in the UK and other member states from suffering financial losses as a direct consequence.
It is also apparent that the UK regulators behaved with undue awe or deference towards Equitable Life, particularly given its long history and hitherto highly reputable status, leading them to consider it as the top pick of the life insurance industry and apparently believed to be too good and too reputable to make mistakes.
In view of the UK government's failure to comply with the requirements of the (EU's) third life directive, and given the absence either of accessible legal redress through the courts or of effective alternative means of redress, the committee firmly believes the UK government is under an obligation to assume responsibility.
The committee therefore strongly recommends the UK government devise and implement an appropriate scheme with a view to compensating Equitable Life policyholders within the UK, Ireland, Germany and elsewhere."
Unfortunately, for the long suffering policyholders, the committee cannot order compensation. However, the report's author, Liberal Democrat MEP Diana Wallis, said:
"For the victims of the Equitable Life failure, the report delivers an analysis of the UK's flawed process of implementing EU law which, combined with the imminent report of the UK parliamentary ombudsman, should arm the victims with powerful findings," she said.
It is absolutely critical to the future of the pension industry and to all of us as savers and people who hope eventually to see our retirement, that there is confidence in this sector. I hope our report will assist that process."
Tory MEP Robert Atkins, an inquiry committee member, is quoted in The Guardian as saying:
"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.
Having categorically proven that the UK and EU financial redress systems are unsatisfactory and lack the requisite level of security 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.
This is imperative if people are to be expected to save judiciously for their retirements."
There will also be a report from the UK parliamentary ombudsman, Ann Abraham, on the Equitable collapse. However, as befitting the "speed" of government processes (doubtless to ensure that Equitable has long been forgotten), this report will not be issued until October at the earliest.
Too little too late for the 1 million policyholders affected by the Equitable scandal.
Maybe they should consider launching a class action?
Is it any wonder that people do not bother to save for their retirement?
How can anyone possibly trust the pensions industry, or the government, to look after their money or their future?
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