Equitable Life pensioners press MEPs for EU action

By Lorraine Mallinder

Date: 15/06/06

The European Parliament's committee investigating the collapse of the Equitable Life Assurance Society reconvenes next week (21 June) to hear further evidence on a case which could lead to EU-wide legislative changes on cross-border consumer protection.

In 2000, Equitable Life nearly collapsed after revealing it was unable to meet guaranteed annuities on policies spread across the EU. A million policyholders, mainly in the UK, with some 15,000 in Ireland and Germany, having seen the value of their retirement savings and investments slashed when the society came to the brink of collapse, are now seeking redress.

UK Liberal (ALDE) MEP Diana Wallis, who is reporting Parliament's opinion on the case, said: "The reason we're looking into this is because it is a European story. It's a good example of where EU legislation has not been satisfactory. How do we get redress cross-border if we go down a country-of-origin path?"

The Parliamentary committee, set up in January after more than 200 MEPs signed a petition calling for an investigation, is looking at the application of relevant EU legislation in the UK, possible shortcomings in the European Commission's monitoring mechanisms and the status of German and Irish claims.

Markus Weyer, chairman of German consumer rights group DAGEV, who has testified to the committee, said: "In Germany, there are about 4,000 Equitable Life policy holders. The majority had long-term pension schemes where the contract [stipulated] payment of large premiums leading to an annuity.

"Most were sold from 1998. This is important as the company was already under financial pressure at that time. It must be specified that the company sold them very aggressively, using negative comparisons with other German companies and offering large payments.

He added: "The German policyholders, much like the Irish, are sitting between regulators. Nobody is willing to speak up for them. That is due to an obvious loophole in EU legislation. Pensioners spent most of their wealth, often liquidating assets, so many now face the prospect of old-age poverty. We believe the EU failed to institute proper directives that protect EU consumer interests in the field of insurance services."

"There was a failure of various regulators to be able to assist their own nationals," said Wallis of German and Irish policyholders. "These people were being ping-ponged between various authorities. What we're likely to see is a number of recommendations that improve EU policymaking and access to redress."

Compensation for German and Irish policyholders is a tricky issue. "The FSA [UK Financial Services Authority] clearly does not consider German and Irish victims to be under its jurisdiction," said Weyer. "We don't expect the British government to provide compensation for German policyholders. Demanding compensation at the European Court [of Justice] is still theoretical. It would be a very expensive and lengthy process."

The committee, initially set up for one year, will be seeking an extension to hear further evidence on the case and to consider the findings of a report being submitted by the UK parliamentary ombudsman in November, which could find the national government guilty of maladministration.

The committee's final report, which was originally scheduled for the end of this year, will now be delayed until early 2007. An interim report will be voted on at a Parliamentary plenary session in July.

Article previews a meeting of the European Parliament's committee investigating the collapse of the Equitable Life Assurance Society on 21 June 2006 to hear further evidence on a case which could lead to EU-wide legislative changes on cross-border consumer protection.