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Press release

Equitable Life regulatory failure "an outrage", say MEPs and UK Ombudsman

Petitions - 01-12-2008 - 18:49
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"Injustice" and "outrage" were among terms used on Monday as a European Parliament committee discussed the latest developments in the Equitable Life affair. MEPs and UK Parliamentary Ombudsman Ann Abraham all took the view that the British government should compensate policyholders who lost money due to the financial mismanagement at Equitable, given that regulatory failure was a major contributory factor to those losses.

The UK Ombudsman, who laid the findings of her four-year enquiry before the British Parliament on 16 July 2008, was invited to a meeting of the European Parliament Petitions Committee as part of MEPs' follow-up work on the EP's own report on the Equitable Life disaster, which was adopted in June 2007.
Apology and compensation needed in the light of "a decade of regulatory failure"
While her report included ten findings of maladministration by the company, Ms Abraham also spoke of "injustice and a sense of outrage at a decade of regulatory failure" (indeed, her report is titled "Equitable Life: a decade of regulatory failure") and told MEPs of her two key recommendations: that the UK government "apologise" and "establish a compensation scheme in six months, which should complete its work in two years". Like the EP inquiry, Ms Abraham also highlighted the European dimension of the case, saying EU life insurance directives were "part of the essential backdrop" for regulators and stressing that her findings applied not just to British policyholders but also to those outside the UK.
Double standards in cases of Northern Rock and Equitable Life?
Diana Wallis (ALDE, UK), author of the EP report, also saw the treatment of Equitable policyholders as "outrageous", seeing them "as victims of the same regulatory failure that came to the fore in the case of Northern Rock" and pointing out that the British government had stepped in swiftly to protect ordinary savers in that case and in the case of the Icelandic banks. So "why do these first victims have to wait and wait and wait?" she wondered. 
"Could this happen again?" was a question asked by Mairead McGuinness (EPP-ED, IE), chair of the EP committee of inquiry. While acknowledging that the UK has now replaced its old regulatory system, Ms Abraham replied "my investigation shows not the failure of a system but a failure to operate the system correctly", so care must be taken to ensure the new system is properly implemented. 
Replying to questions by Sir Robert Atkins (EPP-ED, UK), who also agreed the situation was an "outrage", Ms Abraham said she had found no evidence of "a cover-up" by the UK authorities. As to Sir Robert's question whether she would support a referral to the EU Court of Justice if the government ignored her report, she preferred "to cross that bridge when I need to".  At all events she made clear her determination to "stay with" the case.
Winding up, Petitions Committee chair Marcin Libicki (UEN, PL) said, that since the British government is due to respond to Ms Abraham's report in the very near future, he would ask the President of Parliament to write swiftly to the UK authorities setting out the EP's views and requesting a full answer to an earlier letter by the EP on the matter, to which the UK has still not responded.
Committee on Petitions
In the chair : Marcin Libicki (UEN, PL)
REF.: 20081201IPR43330