Former Equitable directors face misconduct tribunal

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The Independent Online

Chris Headdon and three other former senior directors of Equitable Life could face unlimited fines and may be barred from the actuarial profession after the sector's trade body yesterday slapped misconduct charges on them.

Mr Headdon, Roy Ranson, Alan Nash, all of whom ran Equitable at successive points, and Barry Sherlock, who was its actuary, will be the subject of a disciplinary tribunal by the Institute of Actuaries later this year. The move - which comes after a confidential two-year investigation by the Institute - is its most high-profile investigation into any of its members.

Equitable is already pursuing three of the four, along with 12 other former directors, in a £3.3bn negligence law suit. Mr Headdon was also recently banned from being an actuary for six years by the Financial Services Authority. The company was forced to close to new business in December 2000 after it lost a House of Lords case over its policy of cutting payouts to customers with annuities, which guaranteed a fixed annual return. The Lords ruled that the policy was unfair and forced Equitable to increase payouts to this group. The judgment left Equitable with abill of £1.5bn, which drove it to the brink of insolvency.

The Institute has assembled a list of findings against the former directors. It says Mr Headdon failed "to provide full information to the board on the financial position of the society". It also criticises him over an insurance policy the insurer took out in case the UK courts ruled its strategy of differential bonus payments was unfair.

It says Mr Headdon should have informed the regulator about a side letter he signed to accompany the policy, which appeared to cap the amount Equitable would claim on it. It criticises Mr Nash and Mr Sherlock for failing "to identify and monitor" the risks that Equitable was building up by paying smaller bonuses to guaranteed annuity rate policyholders.

The Institute would not comment on its findings. The tribunal will be heard in private later this year and its decision will be made public. Ernst & Young, Equitable's accountants, learned last week that the actuarial watchdog, the Joint Disciplinary Scheme, had issued draft charges against it over its auditing record at Equitable. The JDS can levy unlimited fines on its members.