Former Equitable chief Headdon defends record

The clamour for compensation for Equitable Life policyholders continued yesterday, as group of them yesterday lodged a formal complaint against the UK regulatory authorities with the European Commission.

The clamour for compensation for Equitable Life policyholders continued yesterday, as group of them yesterday lodged a formal complaint against the UK regulatory authorities with the European Commission.

Meanwhile, Chris Headdon, one of the principal perpetrators singled out by Lord Penrose for Equitable's demise, was defiant against accusations that he recklessly ran the society into the ground. He said policyholders would have fared as badly had they invested with other insurers.

The Government dismissed the possibility of a payout following the publication of the long-awaited Penrose report on Monday, laying the blame for the company's financial troubles with the former management and the previous regulatory regime. But Vincent Cable MP, the Liberal Democrats' treasury spokesman, said yesterday: "The British government may well have a case to answer. There were several quite specific failures in regulation which could reasonably be said to amount to negligence."

The Government will not easily escape the fallout of the report's findings, as Ruth Kelly, the Financial Secretary to the Treasury, will next week receive a grilling by MPs on the Treasury Select Committee. Lord Penrose himself will also give evidence. Policyholders and MPs are demanding that the Parliamentary Ombudsman reopen her case in to the society, as the report demonstrates ample evidence of regulatory failings.

Chris Headdon, who was appointed actuary from 1997 and stepped up to become chief executive in 2000, yesterday said the Government had glossed over the faults of regulators. He defended his own actions, saying policyholders should have known they were investing in a thinly capitalised life insurer. "Lord Penrose wrote his report with the benefit of hindsight and took the view that the House of Lords ruling against the society was a foregone conclusion, which we did not," Mr Headdon said.

"He dismissed many challenges to his analysis out of hand and did not look at what has happened to policyholders in other with-profits funds, who have suffered cuts of 30 per cent and more. We ran the company on a full distribution basis and made no secret of it. Policyholders with us at a time when something went wrong have to bear the brunt of it."