Timeline of the scandal

The Equitable Life's future lay with the courts

Equitable Life has persuaded its policyholders to back a make-or-break rescue package, raising hopes that the worst of the company's two-year crisis may be over.

Equitable has been buffeted by scandal since 1999, when it first announced that it could no longer meet its full financial obligations to its customers.

During that period, the UK's oldest mutual life insurer has won and lost court cases, and been targeted for takeover bids by rivals.

The fog may now be lifting, but the company's doors are still firmly closed to new business, and about one million people stand to lose money.

So just what was the sequence of events that saw the world's oldest insurer end in such dire disrepute?

It all began when the society asked some of its policy holders to take a cut in bonuses since it could no longer afford what it had once promised.

15 January 1999 - Equitable Life launched court proceedings in order to gain approval for the cuts.

But policy holders responded by taking legal action for alleged breach of contract.

5 July 1999 - The first court hearing took place.

I am confident of our success in any appeal that may be launched.

Alan Nash
Managing Director, Equitable Life

9 September, 1999 - Equitable won the first stage of the battle when the Court ruled that it acted lawfully in cutting bonuses.

But the pension holders immediately decided to appeal.

21 January 2000 - Equitable Life's confidence was shaken when the Court of Appeal reversed the decision, ruling that the Society must honour its original commitments.

Equitable Life immediately decided to appeal against the decision to the House of Lords.

20 July 2000 - But the House of Lords upheld the Appeal Court's ruling.

And the company - unable to pay the £1.5bn cost of losing - was forced to put itself up for sale.

27 July 2000 - Prudential, the UK's biggest life assurance company, mulled a £5bn bid for Equity Life.

About ten companies were thought to have considered a take-over, but no firm bids ever materialised.

This is a very sad day, but closing the Society to new business is the only realistic option now available.

John Sclater
former Equitable president

8 December 2000 - Equitable Life closed its doors to new business, having failed to find a buyer. The society remains solvent and continues to pay out premiums on existing policies.

December 2000 - Policy holders are outraged to discover that no with-profits policies will receive any growth for the seven month period from 1 January to 31 July 2000.

Equitable Life had not allocated any growth to its with-profits policies in the first half of the year, hoping that additional funds would emerge from a take-over.

9 December 2000 - Policy holders are even more outraged and complain of being trapped when Equitable Life increased its penalty fee for withdrawing funds to 10%.

19 December 2000 - The Treasury announced that the Financial Services Authority (FSA) is to be probed, following criticism that the regulator should have acted faster in order to protect policy holders.

20 December 2000 - The president and seven non-executive directors of Equitable Life announced that they well quit when replacements are found.

22 December 2000 - Equitable Life begins to sell-off its operations in order to generate cash to pay policy holders.

Equitable's wholly-owned subsidiary Permanent Insurance Company Limited was sold off to Liverpool Victoria for £150m, payable in cash.

23 December - The Office of Fair Trading (OFT) wrote to the Equitable Life requesting information on the untimely rise in its penalty exit fee.

9 January 2001 - The Equitable Life Guaranteed Annuity Action Group proposes a compromise to the Equitable, aimed at ending the dispute and capping the society's liability.

10 January 2001 -The part played by chartered accountants auditing Equitable Life is to be investigated by the Institute of Chartered Accountants.

3 February 2001 - After seven months of searching for a buyer, two bidders suddenly emerge: GE capital and Halifax.

5 February 2001 - Halifax clinches the deal. The Halifax agrees to pay £1bn to buy the Equitable's sales force and non-profits policies.

The £1bn payment will allow the society more freedom to invest the funds of the with-profits policies.

The deal is subject to policyholder approval.

23 May 2001 - Equitable Life's new management faces angry policyholders at its first annual general meeting since the crisis began.

16 July 2000 - With-profits policy holders are shocked and angry to learn that their savings will be slashed by 16%.

But the board says desperate times require desperate measures.

22 August 2001 - The board meets with the action groups in order to thrash out a compromise deal in order to clinch the money promised by the Halifax.

The details of the compromise are not yet made public.

31 August 2001 - The Government announces that it is to launch a full investigation into the circumstances leading up to the downfall of the assurer.

Lord Penrose - an accountant and commercial judge - will head the inquiry.

20 September 2001 - Equitable publishes a compromise deal for policyholders.

It proposes that 70,000 guaranteed policyholders (GARs) should get a 17.5% increase in the value of their plans and sign away their guaranteed pension rights.

And the 415,000 policyholders, who are not GARs, are being offered a 2.5% increase on the value of their policies, but must sign away their rights to any legal claims.

17 October 2001 - Baird report published.

Report by FSA director of internal audit Ronnie Baird wrote the report, which investigated the FSA, PIA and Treasury's handling of Equitable between January 1999 and December 2000.

The report concluded that the FSA had failed to spot key problems and follow up issues that had been uncovered among other issues.

However, Baird also said that the "die was cast" before the FSA took over regulation.

30 October 2001 - Treasury Select Committee.

Sir Howard Davies and Ruth Kelly MP, economic secretary to the Treasury, were cross-examined by the Treasury select committee.

Sir Howard admitted that there had been management failures, but it was Equitable Life which was "arrogant" and had blocked attempts by the FSA to investigate its troubles.

Ms Kelly gave a glimmer of hope to policyholders by saying that the government might consider compensation for some victims if a "grave injustice" had occurred.

13 November 2001 - Sir Howard Davies to be questioned by Treasury Select Committee.

11 January 2002 - Policyholders meeting to vote in person on the compromise deal, a last-ditch rescue package aimed at salvaging the companies finances and meeting its liabilities.

28 January 2002 - Equitable announces that its policyholders voted overwhelmingly in favour of the rescue package. Ninety-eight percent of the company's guaranteed policyholders backed the deal.

8 February 2002 - The High Court approves the rescue package, paving the way for a £250m cash injection from the Halifax.

LI>27 May 2002 - At the first annual general meeting since Equitable's compromise deal to end its £1bn pension liability was passed, members were told that the company was "solvent".

1 July 2002 - Members who move away before their policy before it matures will face increased exit penalties and smaller surrender values.

29 September 2002 - Denies a report that it is secretly planning for insolvency - a move which would put the savings of its 1.5 million members at risk.

15 November 2002 - Equitable cuts income paid to 50,000 with-profit annuity holders by 20%.