Echoes of Equitable Life debacle roll across EU.
The near-collapse of British insurance company Equitable Life revealed poor co-operation and complacency among national regulators in the European Union, a report has claimed. The European Parliament is investigating the debacle that almost wiped out the savings of one million policyholders in Britain, 8,000 in Ireland and 4,000 in Germany.
"It was a disastrous personal event for thousands of EU citizens - the loss of their pension investments," said British MEP Diana Wallis who has written a report on the debacle.
The near demise of the world's oldest insurance company came in December 2000 when the House of Lords in London overturned the insurer's decision to cut final payouts on some policies. Equitable had to set aside pounds 1.5 billion to cover the liability.
Lawmakers are now looking at whether EU insurance law was applied properly in the run-up to the debacle.
The assembly was angered by the "ping pong game" between British, Irish and other national market regulators which left policyholders from outside Britain unable to seek redress.
Co-operation between Equitable's home regulator and their counterparts in Ireland and Germany failed to help policyholders outside Britain, she said.
Equitable's top management was completely changed in 2001, and the new team tried and failed to sue the company's former directors and auditors in Britain.
The European Parliament has no power over the British authorities or funds to offer as compensation.
"We have no magic wand to restore the fortunes of the aggrieved policy-holders," British MEP Robert Atkins said.
But there was evidence of "benign complacency" among regulators, he added.
West Midland MEP Liz Lynne said during the Strasbourg debate: "We have heard from victims sent from pillar to post. Their stories have been heartrending.
"They have made me angry - angry that that they have been let down by their experience of our internal market for financial services.
"For them, it has not produced extra choice, but rather the loss of life savings with no redress mechanisms available."
EU Internal Market Commissioner Charlie McCreevy told the European Parliament that planned new solvency rules to regulate the bloc's insurance industry would result in better protection for policyholders.
"The Equitable Life affair was the cause of much anguish, and we must draw appropriate lessons for the future," Mr McCreevy said.
The new solvency rules would introduce a "harmonisation of supervisory practices to contribute to avoiding this kind of crisis happening again", he added.
"Host state control would not have made a difference in this case, but we should not accept a passing-the-buck attitude." The European parliament is expected to delay its final report until after one from the British Ombudsman in November.