Penrose verdict on Equitable due out 'within days'

The long-awaited report by Lord Penrose into Equitable Life is set to be published next week, in a move which will give the official verdict on whether any blame can be allotted to the Government, directors of the stricken society, or to its auditors for its dramatic demise in 2000.

Sources said the report would be made public as early as next Tuesday. It comes after the Treasury, which could be criticised by the findings of the judge, surprised those close to the situation by sending a confidential copy of the report to the Serious Fraud Office last Friday. Ruth Kelly, the financial secretary to the Treasury, said Lord Penrose's findings would be published in full with the caveat that they would be subject to "legal constraint".

It is likely that some of the information being combed over by the SFO, and possibly details which affect Equitable's ongoing legal action against its former directors and its auditors, Ernst & Young, might be excluded from the published report.

Following intense pressure from Equitable policyholders and from MPs, the Treasury asked Lord Penrose in August 2001 to investigate the way the mutually owned life insurer was run up to its implosion. Potentially, the Department of Trade and Industry, the Treasury, the Government's Actuary Department and the Financial Services Authority could be found to have been at fault in the way they regulated it at various stages in the 1990s.

Such a finding would be deeply embarrassing for the Treasury, which could be forced to pay out hundreds of thousands of pounds in compensation to policyholders who have seen the value of their investments slump. Equitable was brought to its knees by a House of Lords judgement in 1999, which forced it to pay out an extra £1.6bn to one group of customers. The ruling left the society with practically no money in its coffers, and forced it to close to new business and to slash bonus payouts to policyholders.

The current board of Equitable, which has launched various legal actions in order to try to win compensation for the alleged mismanagement of the society, supports full disclosure of Lord Penrose's conclusions.

"The board is very keen to see this report published in full as soon as possible because this has dragged on for far too long," a spokesperson said. He added: "If Penrose gives the board enough evidence, and subject to our own legal advice, we will go after the Government's agencies that have regulated Equitable." The Equitable directors have indicated they might alternatively seek to pursue the matter through the Parliamentary ombudsman.