On the Crisis at Equitable Life
June 19, 2007 12:00 AM
By Sharon Bowles MEP in European Parliament
Originally published by Sharon Bowles MEP
By Sharon Bowles MEP in European Parliament
Originally published by Sharon Bowles MEP
have followed this matter for many years due to my long association with Aylesbury, the headquarters town of Equitable Life, which was affected through job losses, as well as having many policyholders. Therefore, I am very glad that this Parliament has examined the circumstances surrounding the demise of Equitable Life and I hope that our conclusions give some comfort to policyholders in that many of their suspicions and allegations appear well founded.
I am grateful to the frankness of some - unfortunately not all - of our witnesses. Some of the evidence we have taken is astonishing and an eye-opener for the future. Perhaps we had suspected so, but is it enough that the Commission's check on implementation of directives is just a tick-box exercise? I am glad that it is acknowledged now that it is not enough.
We were told frequently - and in many respects I can agree - that the supervisory environment is already very changed and will become more so with the Solvency II Directive. However, we also heard that it is not certain that all supervisors are immune to bullying, which was an issue in this case. As the Commissioner has said, Solvency II is not a zero-failure regime, nor is it intended to be.
However, it is clear from this inquiry that consumers and policyholders expect their investments to be safe and for there to be accountability and liability when something goes wrong. Any less than that and it is a futile wish to see growth in the uptake of personal pensions.
So, whatever the risk of failure, this means we cannot duck the issue of compensation, and while it may not be appropriate to make Solvency II into a Christmas tree with baubles for everything, it is certainly necessary to have parallel work under way on compensation mechanisms.
Alongside that, we have the shameful hiding of facts because of the changes in the UK's supervisory regime from DTI to Treasury to the FSA, and now we have a so-called independent FSA without liability for negligence. Looking forward, that has implications for the supervised businesses, as well as for policyholders, and it requires attention. Maybe all the more so, as changes push other supervisory structures in other countries towards the FSA model and this links us back again and into wider issues of compensation.
So, looking to the future, we must take very seriously, in its widest interpretation, paragraph 14 of the remedies that states: 'There should always be a fully liable chain of responsibility for regulation. The chain of accountability should not be broken including when there is reform of regulatory procedures/bodies'.
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