Thursday July 17, 04:33 PM
Payback Time For Equitable Losers
By Sky News
Government failures led to the near-collapse of Equitable Life seven years ago which lost more than one million policyholders their savings and pensions, according to a new report. It calls for the current administration to set up a Compensation
Fund and apologise to those who have suffered from "maladministration and injustice", which could see billions taken from the public purse.
The Parliamentary Ombudsman Ann Abraham's report, A Decade of Regulatory Failure, found that regulators at the then Department of Trade and Industry and the Financial Services Authority failed to verify the financial position of Equitable over a period of 10 years even though they had a duty to do so.
They also failed to identify the problems which would in time cause the company to close to new business.
And they permitted misleading information, based on a misunderstanding of Equitable's reported financial position, to be provided to policyholders and potential policyholders.
Equitable Life was founded in 1762, the oldest Mutual Society and seen by its savers and investors as one of the safest companies to trust with their cash.
At its peak, it had grown to a £26bn business with more than one million policyholders.
Its crash in 2001 all but wiped out their savings.
Many were older people, often already retired, who were unable to rebuild their finances.
Around 30,000 have since died, many in poverty, their savings and pensions going under as Equitable Life struggled to stay afloat.
The Ombudsman, who believes the Equitable Life case shares some similarities with the crash last year of Northern Rock, said: "Parliament gave those operating the system of regulation robust and wide-ranging powers, which the regulators were under a duty to consider using where appropriate.
"The regulators at the time said they would provide regulation in a proactive and vigorous way. That singularly failed to happen in the case of Equitable."
As well as the Compensation Fund, which should report speedily, the Parliamentary Ombudsman also wants a Ministerial apology to those Equitable Life policyholders who suffered such financial disaster because of maladministration.
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