Calls for Government action over Equitable Life shambles

Jul 18 2008 Daily Record

MPs yesterday said the Government must apologise to hundreds of thousands of people who lost savings in Equitable Life.

The Ombudsman, in a report released yesterday, found evidence of "serial regulatory failure" for more than a decade.

Ann Abraham accused Government and regulators of maladministration that led to losses for Equitable customers of more than £4billion.

She said that the various regulators, such as the Department of Trade and Industry and the Financial Services Authority, simply failed to use the powers available to them to protect the interests of the Equitable's policyholders.

Equitable Life came unstuck after making promises to policyholders that they could not afford to keep.

In 1999, Equitable launched court proceedings to enable them to force policyholders to accept bonus cuts.

They won the first stage of their battle only to lose in the Court of Appeal and then the House of Lords.

Unable to pay the £1.5billion cost of losing the case, they were forced to put themselves up for sale. No one came forward and in December 2000, Equitable closed to new business.

Commons leader Harriet Harman yesterday told MPs she would consider demands for a vote on the issue and for Chancellor Alistair Darling to make a statement in the Commons on it.

During questions on future parliamentary business, she told MPs the Government would give "full consideration" to the comprehensive report by Abraham.

Her Tory shadow, Theresa May, called for a "guarantee" that MPs could quiz Darling when the House returns after the summer break.

Tory Christopher Chope called on ministers to put a stop to "weasel words" and "do the Ombudsman's bidding" and apologise.

Harman said: "All members in the House are concerned about those people who lost out as a result of Equitable Life."

She added: "There will be full consideration in Government and then we will consider how we can make sure this House has a proper chance to question and possibly debate and even vote on the results."

Abraham called for a compensation scheme to be established to assess the individual cases of policyholders and to compensate them.

The scheme should be set up within six months of the Government agreeing to do so, and it should aim to complete its work within two years.

Later, Chope said: "The Government have got it wrong on Equitable Life.

"Why won't they do the Ombudsman's bidding and apologise now and why can't they put a stop to these weasel words from the Government?"

Harman told him that MPs "should recognise that the problems in Equitable Life actually started to arrive under aregulatory regime which was the responsibility of the previous Government."