Ros Altmann - Equitable Life Campaign

Equitable Life Campaign

Altmann has also supported the 1,500,000 the Equitable Life policy holders in their fight for compensation following pension losses blamed on inadequate government regulation of the company. Newspapers began questioning the adequacy of the company’s reserves in 1998 but the “Equitable Life scandal” became major news in 2000 when the House of Lords decided that the company had to honour its Guaranteed Annuity Rate promises. In 2001, close to collapse and now facing an additional £1.5bn shortfall met by raiding the with-profits fund, it put itself up for sale and stopped taking new business.

The Penrose report, commissioned by the Treasury in 2001, was finally published in 2004 after delays due to vetting by Treasury lawyers.
The report said that for a decade the company had promised its policy holders more than it could deliver. By 2000, the discrepancy had reached £3bn rising to £4.4bn following the House of Lords decision and included future profits which might not materialise. The non-executive directors depended on the Chief Executive and Actuary and were incapable of exercising influence. The Government Actuary department had failed to understand Equitable's returns throughout the 1990s. There was a lack of co-ordination between the DTI and the Securities and Investment Board. Whilst the DTI didn’t know how to assess Equitable, most of the blame lay on the company for failures going back to the 1980s. Penrose deemed the regulatory failures were secondary and the public expected too much of the regulators. The European Parliament also said the government had failed to regulate Equitable Life.

In July 2008 the Parliamentary Ombudsman published her report after a four-year investigation. Altmann questioned "whether the holes in our regulatory regime are due to a system driven too much by the interests of the industries being regulated, rather than the ordinary people who need to be protected". She also expressed her "fear that the Government could try to resist any calls for Equitable Life compensation in the same way that it continuously refused to properly remedy the occupational pensions scandal over the last 10 years".

The Ombudsman's report had been due at the end of 2005. Altmann, blaming delays on the investigated departments accused the government of deliberately acting slowly, and called for prompt compensation. In January 2009 the government announced “a paltry compensation scheme” to be paid to those “disproportionately affected” as determined in a report to be produced by Sir John Chadwick. Compensation is expected to be only a fraction of what was lost.

In May 2009, as the Parliamentary Ombudsman issued a "special report on unremedied injustice", Altmann asked "What is the point of Parliament appointing an independent adjudicator if ministers can simply keep on ignoring her decisions?” In July 2009, as Equitable Life victims threatened legal action naming the DTI, the Government Actuary Department and the FSA, Altmann again urged the government to pay up promptly.

An estimated 30,000 of the policyholders have so far died without compensation.