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Tuesday, 29 October, 2002, 15:47 GMT
Equitable members apply pressure
Equitable Life logo
Many members have a 'strong case' for compensation
Equitable Life policyholders who have lost money on their pension policies have taken their demand for 4bn ($6.2bn) compensation to parliament.

Seven action groups, under the banner of E7, met MPs in a rally aimed at increasing pressure on the government over the affair.

The meeting also marked the first anniversary of the launch of an inquiry by the Parliamentary Ombudsman into the Equitable affair.

One policyholder group accused the government of dragging its heels.

"The Treasury is shirking its responsibility to own up and pay up," said Paul Braithwaite, spokesman for the Equitable Members' Action Group.

Growing frustration

One new concern for policyholders is the Penrose Inquiry.

It was launched by the Treasury in August 2001 to investigate the events that led up to the insurer's collapse.

It is separate to the Parliamentary Ombudsman's inquiry - and much more wide-ranging.

But according to a report in the Times newspaper, the Penrose inquiry will be conducted in secret.

It said one of the leading Equitable Life policyholder action groups had been told the pressure group had "no legal power" to enforce publication of the inquiry's findings.

Penrose remit

Penrose will also look at the role of the regulators, including the Department of Trade and Industry and the Treasury itself

In 1998 the Treasury took responsibility from the Department of Trade and Industry for the regulation of insurance companies.

Some of these functions were then contracted out to the Financial Services Authority (FSA) in January 1999.

It was not until December 2001 that the FSA took over completely from the Treasury.

A 'comprehensive and accurate' report

As well as the Penrose Inquiry, the Parliamentary Ombudsman is conducting its own inquiry, but it is much more limited.

Conservative MP Christopher Chope told the BBC that he had been informed that the report had been delayed.

But in a statement issued on Tuesday afternoon, the Parliamentary Ombudsman, sought to reassure people who were concerned.

The statement said the completion of its report did not depend on the conclusion of Lord Penrose's inquiry, but it could not yet give a publication date.

"It is in everyone's interests that the Ombudsman's report is as comprehensive and accurate as possible," it said.

The Legal Services Ombudsman Ann Abraham will take over as Parliamentary Ombudsman from Sir Michael Buckley on Monday 4 November.

She will be responsible for the conclusion of the investigation and the report.

A spokesman said it had written to Mr Chope saying the investigation was progressing and would be "protracted".

Equitable's woes

Equitable's problems began in 1999 when it found that it could no longer afford to pay long-standing policyholders the pension they had originally been promised when interest rates were higher.

The policyholders took the company to court when it tried to back out of its previous commitments.

Equitable Life lost the court battle and was left with huge legal bills, as well as being forced to pay the policyholders more than it said it could afford.

As a result, it was forced to close to new business in December 2000 and sold part of its business to the Halifax - now part of HBOS - last February.

The Equitable Life faces closure after losing a High Court case

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