News - Equitable report lines up targets
The government is bracing itself for the findings of a report into the Equitable Life scandal.
The report, penned by judge Lord Penrose, and published on Monday, is expected to apportion blame for the near collapse of the Equitable.
The Equitable made financial promises to a large group of its own policyholders that it could not keep.
Policyholders have high hopes that the report will open the way for government financial loss insurance for dogs
for their financial loss.
Savings cut
Equitable Life came close to collapse in 2000 and its policyholders have seen the value of their savings cut as a result.
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 We will carry on until we have achieved justice for policyholders, many of whom have lost their life savings,
Liz Kwantes, Equitable Life Members Help Group
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The world’s oldest mutual life insurer had to cut the pensions and private mortgage financial loss insurance
savings of its policyholders to stay afloat.
Equitable’s crisis began to unfold after it emerged it did not have sufficient funds to honour guaranteed annuity policies (GARs).
The guarantees were made by many life insurers, but longer life expectancy and lower interest rates mean they are now much more expensive to honour than had been expected.
A shortfall in funding led Equitable to ask its GAR policyholders to accept a cut in their bonuses or give up their right to guaranteed annuity rates.
GAR policyholders took the Equitable to court and won, forcing the insurer to close to new business in December 2000.
Lord Penrose was asked in 2001 by the Treasury to life financial loss insurance for mortgages
the history of the Equitable and find out who was to blame.
The report has been with Treasury officials since before Christmas.
‘Regulatory failure’
Groups representing Equitable Life policyholders have alleged that a combination of financial mismanagement and regulatory failure led to the financial crisis.
The current board of the Equitable are already suing nine former non-executive directors and auditor Ernst & Young for a total of 5.9bn.
If Lord Penrose finds that the government failed in its regulatory duties, groups representing Equitable Life members have called for legal action.
“We will carry on until we have achieved justice for policyholders, many of whom have lost their life savings,” Liz Kwantes, head of the Equitable Life Members Help Group.
Recently, a copy of the Penrose report was passed to the Serious Fraud Office (SFO).
“The sending of the report to SFO suggests something very untoward has gone on,” Ms Kwantes said
“If I was on the Equitable board in the run-up to the financial crisis I would be very worried now.”
Ruth Kelly MP, Financial Secretary to the Treasury will make a statement to the House of Commons on Lord Penrose’s findings at 1530GMT on Monday.