The provisional findings of a Parliamentary inquiry into the crisis over the Equitable Life insurance company which left over a million savers out of pocket argue that the UK Government is "under an obligation to assume responsibility" and should therefore set up a compensation scheme. The inquiry has spent the last year speaking to witnesses and investigating the background to the case. All MEPs on the inquiry will vote on the report on 8 May.
In the 1980's the British private insurance company Equitable Life looked like a good place to set aside some money for retirement. It was one of the oldest in the world and had wide experience of pension policy. However, by the mid 1990's falling interest rates and lower inflation had put the company into trouble. Shortly after it closed for new business in 2000, it reduced the value of all its pension policies by 16%.
Over 1 million savers out of pocket
This devaluation affected over 1 million savers - the vast majority in the UK but savers in Ireland and Germany also lost money.
MEPs began to get involved in the affairs after the Parliament received two petitions from policy holders of Equitable Life. The petitions alleged that the UK had failed to supervise the company adequately under EU insurance law (the Third Life Directive). The purpose of the inquiry was to investigate if EU legislation had been correctly implemented, to see what remedies were available for policy holders and to make recommendations for legislation.
UK Government should set up compensation scheme
The provisional findings of the draft report authored by British Liberal MEP Diana Wallis are:
The UK government is "under an obligation to assume responsibility" and should therefore set up a compensation scheme for policyholders.
EU law and policymaking must be overhauled to prevent future cases.
EU legislation should give consumers "clearly defined rights which can be relied on before national courts" and there should be better alternative dispute resolution schemes throughout the Union.
Speaking last week Diana Wallis said that "this is the first time the European Parliament has had an opportunity to look very carefully at how a piece of legislation is implemented and how it works in practice across the EU". She warned that because of improper implementation of the Third Life Directive "things like that might happen elsewhere as well".
38 witnesses - 11 public hearings
The inquiry left no stones unturned in its quest for the truth about the collapse of Equitable Life. In the course of its work it heard from 38 witnesses, held 11 public hearings, met 19 times and sent 2 fact finding missions to London and Dublin.
The full Committee of inquiry will hold a vote on the report on 8 May with a full vote in the Plenary session expected in June. Unfortunately for savers, the Committee cannot force the payment of compensation.