The European Parliament ‘s damning report on the UK government’s lax regulation of Equitable Life could finally pave the way for compensation for the more than one million customers who have lost money since the insurer was almost brought to its knees in 2000.
The report says that the UK government should assume responsibility for the Equitable debacle and calls for a tightening of European Union insurance standards to prevent a similar scandal reoccurring..
Equitable Life customers have lost between £2bn and 4.9 bn since it nearly collapsed at the beginning of this century after it was found to have inadequate reserves to pay the generous guarantees it had promised to a group of annuitants, leading to the discovery of a £1.5bn black hole in the insurer’s reserves.
Providing the first ray of hope for Equitable Life’s long suffering policyholders, Lib Dem MP, Diana Wallis, who drafted the EU Parliament report, said: “This report will assist the victims in a pincer movement with the UK Parliamentary Ombudsman, perhaps, to finally deliver compensation.”
The EU legislators blamed the FSA for taking ‘light- touch’’ regulation too far and for giving supervisors more latitude to waive capital guidelines than is permitted under the EU Life Insurance directive.
The report added: “It is also apparent that the UK regulators behaved with undue awe or deference towards Equitable Life because of its long history of providing superior returns.
As an example of its ‘deficient’ regulation, the EU Parliament criticised the FSA for failing to police a conflict of interest in which Roy Ranson, the actuary appointed by Equitable Life to represent policyholders’ interests, was also the company’s chief executive officer from 1991 to 1997.
The next step in the final denouement of the Equitable saga will be the publication of the report by UK Parliamentary Ombudsman, Ann Abraham, which she says cannot be published before at least October 2007 because of a 500 page response from the Treasury which she must consider.
In the meantime, let’s hope that our Prime Minister-in-waiting, who is so fond of grand flourishes shortly after gaining new power, will realize that the game is up and that holding out against the opinion of the EU Parliament, the Parliamentary Ombudsman et all is no longer an option.
If he wishes to restore confidence in private sector pensions – a pre-requisite in the run up to the launch of personal accounts in 2012 - here is his chance. Let’s hope he grasps it with both hands.

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As the House of Lords is due to vote on amendments to the Pensions Bills tomorrow, we will witness, yet again, the spectacle of pensioners stripping off to their underpants on Parliament Green, in a last ditch bid to bring their plight to politicians’ attention.

The amendments, which have cross Party support, will ensure that the hopelessly flawed Financial Assistance Scheme pays out benefits on a par with those paid by the Pension Protection Fund.

Crucially, the amendments will also ensure that the payments start as soon as the victims reach scheme pension age, rather than having to wait until their schemes are wound up. In addition, a Lifeboat Fund would be set up to help mitigate the costs to the taxpayer, by using scheme assets and unclaimed financial sector assets that the Government can use for this purpose (if it has the will).

The amendments will then go back to the House of Commons for the Third Reading of the Pensions Bill, which could provide the first big policy test for our new Prime Minister.

Let’s hope that this spells the end of the long and sorry tale of the pension victims, who have fought so long and so hard for justice for their cause and whose valliant leader, Ros Altmann, has done so much to bring their plight to the public’s attention.