MEPs blame Britain over Equitable Life debacle

A EUROPEAN Parliament report into the Equitable Life debacle, where a million people lost savings and pensions, blames the British government’s light-touch regulatory system.

It also found that the reputation of Equitable Life as one of the oldest and most established firms in the world meant the regulators did not pay sufficient attention to what was happening in the company.

About 6,500 Irish people were among those that lost close to €2 billion, six years ago, when the company also collapsed.

Fine Gael MEP Mairead McGuinness, a member of the committee set up to investigate what went wrong, said they had no power to make up the losses suffered by ordinary people, but hoped the report would help ensure the British government does.

“The British authorities have questions to answer, as do the Irish authorities. There was nobody to help people who had lost their savings, their pensions or their investments. People did not even know where to phone or where they could get information,” she said.

The report firmly blames the British government for failing to transpose and implement the EU Third Life Directive coherently, and for their generally hands-off or light-touch regulatory system.

It also finds that the European Commission’s checks to ensure legislation is properly implemented by member states was lacking.

“Just a matter of ticking boxes,” said Ms McGuinness.

She added that the commission has improved its procedures, but that the pensions and insuranceindustry as a whole should be interested in ensuring a similar debacle did not happen again.

“They need to engender confidence in their clients, so it is in their interests to prevent this kind of thing,” she said.

The report should add to the pressure on the British Government when the British ombudsman’s report into the debacle is finalised shortly, and should add to the pressure to compensate victims, she added.

Investors were effectively deprived of their money after Equitable Life refused to take any new business in December 2000 after the House of Lords insisted it must honour guarantees on policies it sold in the 1970s and 1980s. The decision left them with about €2bn in debt.

They sold their ongoing business to Halifax, in 2001, and took action including penalty charges to dissuade clients withdrawing their money.

It now administers its policies through a number of closed life funds.