Parliamentary Ombudsman denounces proposed £400m Equitable payout

With the exception of With Profits annuitants, what exactly are they to be compensated for? Poor regulation, dreadful governance or just market forces? Did these poor individuals lose more than with profits policyholders with other companies?

@Tony - the consequences of (i) an aggressive marketing campaign that included "window-dressing" their reported bonuses to keep near the top of league tables together with (ii) legal advice that a bonus system that the directors regarded as fair and equitable was also legal. After their lawyers encouraged the directors to launch a "test" court case that they lost in the House of Lords the company was forced to pay out in bonuses to annuitants with Guaranteed Annuity Rates money that they had already paid out to maturing non-GAR policyholders and the mutual company became inadequately capitalised. The new board's new lawyers advised them to sue everyone *except the lawyers who supplied the erroneous advice* and the company incurred heavy legal expenses in losing a series of court cases against retired executives, non-executive directors, the auditors ...

So yes, the poor individuals lost a lot more than policyholders with other companies

Equitable Life took a lot of new business because of their misleading advertising, and telling clients "we don't pay commissions to financila advisers...."

Just huge salaries and bonuses to employed advisers, company cars, mobile phones, hpliday pay, sick pay, pension contributions......

And of course their misleading fund performances, and reneging on the guaranteed annuity rates , and much else.

Caviat empor..... why should the taxpayer or us as financial service providers NOT related to most of these sales pre-FSA pick up the tab?

Anon 1 -

All you say is correct, however, it can surely all be summarised as poor management, and not just over the period you describe.

As Dee infers, the Company's problems emanate from Management decisions and policy, dating back 20 years or more prior to the Financial Services Act.

At that time, despite the best practice guidelines from the Institute of Actuaries, the roles of Chief Executive and Appointed Actuery were combined, with the obvious conflict of interest that this involved.

In later years, Chief Executives at Equitable, and to be fair elsewhere, ensured that only weak Actuaries willing to bend to the requirements of Marketing, were appointed.

At the same time, the Company management seemed to have a mindset which was convinced it was altogether superior to other Companies, and indeed appearing to believe it's own advertising.

However, the point is that none of this should be justification for compensation from the public purse, otherwise where do you draw the line?

Should Government undertake to compesate all customers of businesses which fail, regardless of the nature of the business, through bad management or for whatever other reason?

I'm sure you are not advocating this, in which case, there can be no justification for compensation other than, as Tony says, the With Profit policyholders, who are clearly covered under normal procedures.

Once again - Caveat Emptor. If it looks so much better than the others, Why would that be so?

Another point is that, despite being stripped of some of their bonus, many Equitable policyholders ended up with payouts broadly similar to payouts from other other companies, although of course lower than they had originally expected.

Has that happened to any other With Profit Poicyholders?

Have they (other than Endowment 'mis-selling') been compensated? Of course not, and nor should they be.

As I'm sure I've seen somewhere before, 'The value of Investments can fall as well as rise'

I believe the fair compensation proposed by Ms, Abrams, Equitable itself and EMAG is based on the actual performance of a basket of equivalent with-profits pension schemes (as opposed to a basket case of such schemes).

An apparently fair approach which, I think, answers the question quite nicely.

What is on offer now after interminable commissions and inquiries, to say nothing of clear and non-ambiguous pre-election promises by the leader of the new coalition, is about 10p in the £ of the compensation expectations which resulted from that fair (and Equitable) calculation.

Can someone please tell me something as I do not know the procedures?

When you have a pension pot of money, you buy an annuity and you collect your pension from it.

When you die your spouse normally collects half your pension until they die.

.....What happens to the money in the annuity?

Surley enough people with an EL pension have popped their cloggs by now for EL/Government to pay up out of petty cash?

The problem appears to me to be one of not understanding plain English.

No commission to middlemen???

What is a commission other than a reward paid for work done? So is a bonus. Do the FSA get bonuses? Well it's the same as a commission - a reward paid for work done. Did EL salespeople get bonuses? I rest my case.

Whether it is dressed as a fee, a commission or a bonus, it is still a reward for work done.

Self employed are all effectively therefore on commission only - a fee paid for work done. So solicitors, get off of those high horses. And hell mend you for allowing EL to pay the salespeople that you dealt with at EL bonuses.

Equitable policyholders are not a special case - they've got what they dererve.

I remember the smug bastards well - Oh don't bother me - please - you can't tell me anything , I.m one of the chosen one's - I'm with Equitable Life- they don't pay commissions to middle men like you..

Ha Ha Ha Ha Ha Ha