Equitable life policyholders were yesterday drumming up support to secure funds from the society to fight the Government for compensation, as growing evidence against regulators emerges from the Penrose report.
The Equitable Members Action Group is calling for £2m of Equitable funds to help finance a case against the Government for maladministration, through the European courts if necessary. It needs 1,000 signatures of qualified voting members by 19 March to lodge a resolution at the company's annual general meeting in May.
"EMAG revealed one year ago Penrose's core message about over-paying bonuses and a black hole that had developed over more than a decade that was unrelated to its guarantees. This study, by Burgess Hodgson, was achieved from exactly the same data available to the regulators at the time," Paul Braithwaite, of EMAG, said yesterday, saying this is evidence of maladministration.
The Government ruled out compensation this week after the publication of the Penrose report. It said the blame for the company's demise lay on its previous management and that poor regulation was the fault of the regime put in place by the previous Tory government.
Policyholders are refusing to give up. "The one pot of money where there are still billions of pounds is the with-profits fund. The most effective way of using its dwindling funds is to use a tiny fraction of it to spend on legal advice on whether there is a case. A full reading of the report shows multiple regulatory failures," Paul Weir, another campaigning policyholder, said.
Some policyholders are sceptical that only £2m would be needed to take on the Government. Liz Kwantes, an Equitable Life policyholder, said: "I would be very, very surprised if it only cost that much, given how much we have spent on taking action against the former directors and former auditors and they haven't even got to court yet." Parallels are being drawn with the court case against the Bank of England on its regulation of the BCCI. It collapsed in 1991, but the case reached court only this year. The fees to retain the barrister leading the case for the liquidators are thought to be £3m alone. The entire case, which is expected to last 18 months, is likely to cost £50m.
The £2m which EMAG is asking for, however, is to fund the initial exploration of a case. Mrs Kwantes supports the EMAG motion and believes 1,000 policyholders will sign up.
The company's board said this week that it would consider funding an action if policyholders request it. It does believe that the Penrose report highlights a "catalogue" of errors, but it is likely to recommend that court action be the last resort for redress.Reuse content