New push for Equitable compensation

By JEFF PRESTRIDGE, MONEY EDITOR AT LARGE
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EQUITABLE Life will this week increase pressure on Parliamentary Ombudsman Ann Abraham to reopen her investigation into the way the beleaguered company was regulated in the Eighties and Nineties, paving the way for possible Government compensation for its 350,000 policyholders.

Vanni Treves, chairman of the 242-year-old mutual, will tell policyholders at the annual meeting on Wednesday that the Ombudsman now provides the best hope for compensation for the losses they suffered in the wake of the society's near financial meltdown.

Last month, lawyers told Equitable Life's board that they had no chance of succeeding with a legal action against the Government.

Treves is adopting a multi-pronged campaign to force a new investigation. First, he has just written to all MPs urging them to contact Abraham.

Treves wants them to demand that she reopens her examination into how government departments such as the Treasury and the Department of Trade and Industry failed to spot the financial problems at Equitable that culminated in it closing to new business in 2000.

In light of Lord Penrose's recent report into Equitable Life, and the litany of regulatory failure it revealed, Treves' view is that Abraham could eventually force the Government to pay compensation. Abraham has already asked for views from MPs on why she should take a second look, with a deadline set for Friday. Second, Treves and his chief executive Charles Thomson will meet Abraham on Tuesday week and urge her to extend any examination to include the workings of the Government Actuaries Department (GAD), which, like the Treasury and DTI, failed to pick up warning signals.

Separately, Treves is writing to the Government, insisting any new inquiry by Abraham includes the GAD.

Analysts predict that Treves will also announce at Wednesday's AGM that an attempt by the Equitable Members' Action Group to get policyholders to hand over £2m of members' money to fund a policyholder-led claim against the Government for compensation has failed.

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