Equitable Life Assurance Society Limited

​Parliamentary Ombudsman Confirms Guernsey Policyholders Covered by Investigation

In our press release of 21 February 2005 we indicated that the Commission had made a submission to Iain Ogilvie who is conducting the investigation into the regulation of Equitable Life Assurance Society ("Equitable Life") on behalf of the Parliamentary Ombudsman, that Guernsey policyholders should be covered by the Parliamentary Ombudsman's investigation. 

Mr Ogilvie has today explained that the position as set out in our submission has been confirmed by Her Majesty's Treasury that "in practice the prudential regulation of all Equitable's business was undertaken by the UK regulator and that they agree that complaints about such regulation would constitute complaints concerning rights or obligations arising within the UK".  

As a result, Mr Ogilvie has concluded that the "investigation is indeed capable of covering the position of all international policyholders who claim to have suffered injustice as a result of maladministration by the prudential regulation of Equitable Life prior to 1 December 2001. Any findings and recommendations we might make at the conclusion of the investigation will therefore also address the position of such policyholders". It is clear that "international policyholders" includes Guernsey policyholders.  

It is very pleasing that the uncertainty has now been clarified in favour of Guernsey policyholders and the Commission is glad to have been able to assist the Parliamentary Ombudsman on this important matter.  

The Parliamentary Ombudsman's investigation into the substantive issues is expected to produce its recommendations early next year.

UK Financial Ombudsman Service (FOS) confirms that it will not consider "Penrose-related complaints"

Background

As we also explained in our press release dated 21 February 2005, the FOS invited submissions from policyholders following a request from Equitable Life which resulted in the FOS considering as a preliminary issue the question of whether it should hear claims based upon "Penrose-related complaints". Given the nature of the issue in question and its relevance for Guernsey policyholders, the Commission considered it appropriate to make a submission to the FOS for consideration as part of the preliminary issue.  

The Commission submitted to the FOS that there was no obvious reason why it would be inappropriate for the FOS to consider the merits of "Penrose-related" issues and expressed concern that policyholders should not be denied access to the FOS save in the most extenuating circumstances. 

FOS Position

After considering submissions from many parties, the Financial Ombudsman has stated in an announcement dated 23 March 2005 that he considers that it would not be appropriate for the FOS to consider claims by policyholders based upon "Penrose-related complaints" and as a result, it will not do so.  

The Financial Ombudsman's reasons were that:

• It seems probable that the PIA Ombudsman (his predecessor in the relevant period governing the conduct complained of) would have dismissed equivalent complaints.

• He is satisfied that there are already court proceedings, disciplinary proceedings and other enquiries and investigations under way regarding some aspects of the subject matter of these complaints.

• Even if no current court proceedings determine the subject matter conclusively, he is satisfied that it would be more suitable for these complaints to be dealt with by a court.

• Were the FOS to proceed to investigate the matter and to determine the complaints in favour of the complainants, it seems likely that his decision would result in a stalemate. The FSA has already investigated the same allegations and concluded that "generic claims against Equitable Life regarding its basis for allocating bonuses during the 1990s are unlikely to succeed".

• The wide implications in any investigation that potentially affects up to a million people, contrasted with the relatively small number who have complained.

For the full text of the FOS' decision, please click here.