Blow to hopes of Equitable pay-out.
HOPES of compensation for Equitable Life policyholders have receded after a report said the mutual was the "author of its own misfortunes."
Around 750,000 policyholders who have lost millions of pounds in the society had hoped the long-awaited Penrose Report would find evidence of regulatory failure and pave the way for them to pursue the government for compensation.
But the report found that while the regulatory system had failed policyholders, the society's problems stemmed from its management.
Scottish judge Lord Penrose said there was a culture of "manipulation and concealment" on the part of some of the society's senior management.
He said the board failed to get "fully to grips" with the financial situation faced by the society, while the collective skills of its members were "inadequate for the task."
He added that non-executive directors were wholly dependent on actuarial input from Roy Ranson, who was for a time both chief executive and appointed actuary, and they were largely incapable of exercising any influence on the actuarial management of the society.
He added that Mr Ranson did not inform the board about several key management decisions and the business risks inherent in the general actuarial management of Equitable.
As a result, the board's understanding of the problem surrounding its guaranteed annuity rates (GARs), which offer people a guaranteed retirement income, was at best limited until autumn 1997.
Equitable was plunged into difficulties after it lost a legal battle over the rights of its GARs, leaving it with a pounds 1.5billion liability and forcing it to put itself up for sale and close to new business.
Policyholders' best hope for compensation now lies with the Parliamentary Ombudsman.
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|Publication:||Coventry Evening Telegraph (England)|
|Date:||Mar 9, 2004|
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