The Equitable affair: 'I feel one man can make a difference'

Paul Braithwaite, the veteran campaigner for compensation over the insurance disaster, can sense victory. He speaks to James Mawson
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The Independent Online

Campaigners often lead thankless lives. Legal knock-backs, insults, tireless graft and administrative hurdles are par for the course - with no promise of reward.

Campaigners often lead thankless lives. Legal knock-backs, insults, tireless graft and administrative hurdles are par for the course - with no promise of reward.

Faith in the cause is critical. Just ask Paul Braithwaite. In his struggles with the insurer Equitable Life, it is determination that has transported him from initial despair at the loss of his pension money to take a fight for justice on behalf of thousands to the European Commission. "I like uncharted waters and feel that one man can make a difference," he says.

"However, the forces of government have impressed me. Four years ago, I never really believed in the establishment."

The 58-year-old continues to lead calls for a full investigation into the Equitable debacle - and ultimately compensation for around 800,000 policyholders left out of pocket.

To recap, the insurer was dealt a body blow in 2000 when the House of Lords ruled that it had to honour pledges of guaranteed pension incomes to some 90,000 policyholders - leaving it with a £1.5bn bill that torpedoed its finances and forced it to close to new business. (These pledges - made from the 1950s onwards - were too expensive, which had led Equitable to try to renege on them.)

The legal ruling set in motion a tortuous chain of events - including Equitable's own £3.7bn counter-claim against its auditors and former directors - culminating in the Penrose report in March 2004. This concluded that a mix of poor management and loose regulation had been behind the financial disaster.

Although Lord Penrose ruled out any blanket compensation for policyholders, this has not deterred Mr Braithwaite, who is the paid general secretary for the nine-man committee of the Equitable Members Action Group (Emag). One of seven separate such groups set up in the wake of the crisis, Emag has 15,000 members and has raised £600,000 in voluntary contributions to fund the campaign.

Mr Braithwaite's appeal to the European Parliament to investigate Emag's complaint that the UK Government was negligent in its regulation of Equitable has recently gathered new momentum. After a petition to the parliament was successfully filed, the matter is now under investigation by the European Commission.

The crux of the complaint is that Equitable promised more in bonuses in the 1990s than it had in assets - a gap, it is alleged, that government-appointed regulators permitted under their "light touch" rule book, in breach of European law.

Equitable, the Treasury and the Financial Services Authority (FSA), the current City regulator, have all declined to comment on the European action - although the insurer has previously rejected the allegations.

All point instead to a decision expected in November this year from the Parliamentary Ombudsman on whether there was regulatory failure at the time - and therefore maladministration - by the Treasury, the Department of Trade and Industry and the FSA.

Taking on well-established companies for compensation over a failed financial product has become something of a national habit. Recent concerns over endowment policy shortfalls, split-capital investment trusts and high-income precipice bonds have prompted many borrowers who believe they were mis-sold these products to contact the sellers - only to be rebuffed at every turn.

Some have been forced to turn to the Financial Ombudsman Service (FOS) for redress. Indeed, in the case of endowments, the FSA recently warned lenders not simply to shunt consumers alleging mis-selling straight to the FOS rather than dealing with the complaints themselves.

In the case of Equitable and the struggle for compensation, Mr Braithwaite's crusade has become very public. The most high- profile attack - and a low point for the campaign - came at the 2003 Equitable annual general meeting when chairman Vanni Treves accused Emag of being, "vicious, volatile, venomous and vindictive" in its demands for the mutual society to explore going to Europe or suing the Government as regulators.

However, Mr Braithwaite now feels he has turned a corner. "Four years into our campaign and the prospects have never been better," he says.

"The Parliamentary Ombudsman is taking a second look on a wider remit, and European [Equitable] policyholders who do not have representation will get justice, along with UK residents, from the European Commission."

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