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At long last, there's some good news for Equitable Life policyholders. Apparently the Government has decided that the Financial Services Authority should investigate whether the insurance industry's regulator conducted a proper review of Equitable Life's affairs once it revealed that it was facing serious problems.
Hurrah! Something's happening. Policyholders are being taken seriously. Finally, all those to blame for the downfall of the 238-year-old mutual will surely be outed and punished for their alleged misdeeds.
Erm...
The "regulator" to be subjected to this investigation by the Financial Services Authority is, stunningly, the Financial Services Authority! Hah! They've been told to investigate themselves! Not only that, but they're to report to the Treasury who, a couple of years ago, appear to have supported the Equitable Life Board's management of the Society.
We can, of course, expect a full, impartial and public report on this matter although a little cynicism from our Fools is only to be expected in the circumstances.
It's not yet known when the FSA is expected to produce this report on its own conduct but The Motley Fool has been assured by the LibDem's Trade and Industry spokesman, Dr Vincent Cable, that he will be tabling a question today (Wednesday) on that very point.
The announcement of this "investigation" came after an Adjournment Debate yesterday between MPs about the way in which the FSA has "regulated" Equitable Life throughout its difficulties leading up to, and including, the recent House of Lords decision that forced the Mutual to close its doors to new business. I would urge all EL policyholders to read the transcript -- it's rather illuminating!
The interesting thing is that it appears to have reflected fairly accurately the views that have been expressed on our Equitable Life discussion board by Fools who are members of the Society -- including Motley Fool staff (yes, I'm holding my hand up).
Admittedly, the debate did not cover the views of some Fools who, perhaps, understandably, want to shoot the entire Equitable Life Board, the FSA and anyone else who can be dragged into the firing line. But it did tackle the issue of possibly suing the pants off any and all of them in the courts.
However, there are many more Fools (and MPs) who believe that if policyholders sue the Board, they will effectively be suing themselves -- unless they single out the directors as individuals. And suing individual directors, even if EL members were to win, is hardly going to produce much more than a few coins in the fountain in terms of compensation.
An alternative proposal is to sue the regulatory FSA, whose authority devolves directly from government. But what purpose would that serve? Again, if the Society's members won, any compensation would amount to a mere drop in the ocean, unless the Government stepped in to take overall responsibility.
So, does that mean that the Government is where the victims of this entire Equitable Life fiasco should ultimately be looking?
Well -- if you've a mind to tackle your local MP, you might get some sympathy. To a greater or lesser degree, some of the pension schemes of members of both Houses of Parliament, the Civil Service and quite a few other public sector organisations are in the hands of -- yep, you've guessed it -- Equitable Life!
I can't help feeling that we should be lobbying our MPs before taking any action ourselves. They have a vested interest, after all, and could bring pressure to bear, not only on the Government, but also on the Equitable Life Board of Directors. Surely the Board should call an Emergency General Meeting without us having to demand one, so we can ask the questions we want to ask. Perhaps it's because we would insist on appointing a few lay members to the Board who would be rather more motivated to get to the bottom of this tragic farce.
For some background information and your options, take a look at this article by Rob Davies (TMFEssex) and if you decide to give your local MP some added impetus then try contacting him or her by fax (www.faxyourmp.com makes this easy) or e-mail.
Where Next?
• Background to the Equitable Life crisis
• Equitable Life Discussion Board
• Equitable Life website
• Equitable Members Action Group