Equitable Life 8 years for a Government apology and no date for compensation

monkeyspanner

Yvette Cooper apologised yesturday for the regulatory failures which allowed Equitable Life to continue to trade.

However, she was unable to give any sort of timetable for compensation and has ruled out a blanket compensation scheme. Compensation will only be given where someone has "suffered disproportionately". But she was unable to define the meaning of this phrase.

So all you Equitable members don't hold your breath.

br1anstorm

The Equitable Life saga has been a long and sorry tale. Even now it looks as if the Government, despite being forced by the damning Ombudsman report to acknowledge the charges of maladministration and inadequate oversight, is unwilling to accept full responsibility for its failures. Of course the then Equitable Life directors share the blame, and all Equitable Life policyholders and shareholders have a right to feel aggrieved.

One little-noticed aspect of this affair is the double culpability of the Government where its own employees, civil servants, were concerned. Not only did the Treasury's financial regulators fail to monitor and detect the flaws at the heart of Equitable Life (and thus took no steps to correct them). Astonishingly, the Government actually selected and promoted Equitable Life as one of the two "official" providers (the other was Scottish Widows) of additional Civil Service pensions (AVCs). So civil servants - I was one - paid their AVC contributions in good faith, believing that the Treasury would have satisfied itself that their appointed provider(s) were sound. So much for "due diligence".

And when Equitable Life went down, what was the Government/Treasury response to the employees to whom they had (with all the gravitas of government) recommended the firm as a pension provider? In essence, the government line was "tough luck".

So as well as failure to regulate and monitor Equitable's activities, the Government was in effect guilty of a clear case of mis-selling. What chance, I wonder, that they'll acknowledge that and compensate those many civil servants who lost out as a result?

david78

It's a disgrace. An apology's no good. I never asked for one. They need to compensate people now, and set up a mechanism to look after those left behind by the many former policyholders that have since died.

monkeyspanner

Steve Webb MP for North Avon lead a private members debate today. Link here: http://www.parliamentlive.tv/Main/VideoPlayer.aspx?meetingId=3245&rel=ok

Equitable life section is about 1hr 30min into this link

Fairly large number of MP's attended and all critical of the Government.

As usual the full government response was not made available for Yvette Coopers statement. It now seems the Government has chosen to refute/ignore many of the Parliamentary Ombudsman findings. This being the case you have to ask as many of the MP's did "what is the point of having an ombudsman?" and "why did you have a second ombudsman's investigation".

30,000 policyholders have already died, the average age of the anuitants is 80 so I assume the goverment hopes to remove the problem by further delaying any effective action.

The goverment have invent a new legal concept "Means tested justice" in that policyholders are only likely to get any compensation if they have little or no other assets and have been "disproportionately affected".

monkeyspanner

On 29 Jan the Parliamentary Ombudsman appeared before the Public Administration Select Committee and was highly critical of the Government response to her report. She stated that if the government had accepted her findings but stated there were no public funds to help Equitable's policyholders it would have been easier to understand than the piecemeal rejection of some of her findings. Her colleague also stated that in some cases the response did not understand what had been in the report.

EMAG also appeared and gave really the only clear explanation of the consequence of the Governments responses. Apparently in their opinion it will only be possible to claim if the policyholder put money in from 1999 onwards as by rejecting some of the ombudsman's findings the government had effectively eliminated claims prior to that date. The detail of that escaped my understanding. They were firm in their opinion that the governments response was unacceptable and it was up to MP's to stand up for their ombudsman's report and insist the government take it on board.

Here is a link to her memo to the PA select committee dated 26 Jan
http://www.cookham.com/community/equitable/PASC_memorandum_20090129.pdf

If you would like to watch the committee session here is a link
http://www.parliamentlive.tv/Main/VideoPlayer.aspx?meetingId=3307

leveller2911

Given that there has been clear failure of regulation with the banking system , the effects of which have been enormous, should the government also pay compensation to "savers" who have lost interest (income)?.

Personally I don't think the poor old tax payer should have to keep coughing up when ever someone makes a coc*up.

Its about time the "fat cats" in this country are brought to account.Im sorry if that upsets a few on this thread.I do feel for the people who have seen there investments drop but why is it the true criminals in all this have got away with it AGAIN.?

monkeyspanner

The government have coughed up for savers and compensated savers even in failed Islandic banks when they had no obligation to do so.

We are talking here about an assurance company which was repeated allowed to continue trading and drawing more savers funds in by a series of government regulatory bodies who knew there was a problem but failed to take action. In effect a ponzi scheme that the regulators permitted.

The Equitable life anuitants face a future where their pension will probably decrease further because insufficient funds remain in the pension fund to continue paying at the current level. 30,000 of these pensioners have already died in the 8 years since Equitable ceased trading whilst the government deliberately delay admitting liability. Compare this to the period of weeks for savers in failed banks to be compensated.

The government stepped in to provide a scheme to support occupational pension schemes to the tune of £8billion (correct figure I think) after initially offering £400million.

Why is Equitable being made an an exception? Because failure to deal with the problem will not cause a generalised run on the banks which we came pretty close to in 2008.

exil

It seems what people want is for the government to act as guarantor for all banks, building societies, pension funds, not to mention car manufacturers and the rest

As a leftie I actually don't have a fundamental objection to this. It wouldn't distress me if the whole financial sector was nationalised.
What amazes me is the number of conservatives, both small and large C, who want the government to step in at every point where someone has made a blunder or walked off with investors' or savers' money.

Of course when we say "government" we really mean "taxpayer". Gordon Brown and David Cameron are not actually going to pay for this out of their own pockets. And why should they? The regulators are employed to do a job, like other civil servants, and the idea that cabinet ministers are directly responsible for their civil servants' mistakes is something of a convenient fiction - a minister can be sacked but the civil service carries on as if nothing has happened.

monkeyspanner

The point with Equitable is that the problem was noticed by the regulator and they chose to ignore it, as a result many conservative investors lost a large proportion of their pension. The UK already has a low savings rate, as a result most of the funds which propped up UK consumer borrowing came from outside the UK. This funding has reduced considerably hence the credit crunch. If the government want us all to live for today and spend all our income then fair enough we do not need to have comfidence in the regulator as there will be nothing to regulate. Conversely if making provision for your retirement is seen as beneficial to the country then we need to have confidence that savings and pensions will be properly regulated.

The taxpayer is already supporting the banks and part of that support is going to pay bankers bonuses.

Old_Slaphead

monkeyspanner wrote: »

Why is Equitable being made an an exception? Because failure to deal with the problem will not cause a generalised run on the banks which we came pretty close to in 2008.

If I was being cynical I would suggest that many EL members are from professional classes and there probably aren't too many votes in it.

Not sure whether savers with £50000+ in Icelandic banks could be considered as likely Labour convertees either - but there you go.....same old 'headless chicken' government making policies on the hoof.

monkeyspanner

Old_Slaphead wrote: »

If I was being cynical I would suggest that many EL members are from professional classes and there probably aren't too many votes in it.

Not sure whether savers with £50000+ in Icelandic banks could be considered as likely Labour convertees either - but there you go.....same old 'headless chicken' government making policies on the hoof.

There were over 1 million investors in EL mostly from the group who still bother to vote. So a fair amount of votes at stake but maybe not many labour voters.