The Equitable Life Assurance Society

The Equitable Life Assurance Society

The Equitable Life Assurance Society (Equitable Life), founded 1762, is a life insurance company in the United Kingdom. It almost collapsed in 2000 and had to cut the pensions and retirement savings of its policyholders to remain afloat, causing a large public outcry.

The UK government's Treasury commissioned Lord Penrose to lead an inquiry into Equitable Life, which took two and a half years to complete. His 818-page report [cite web | title = Penrose Report | publisher = HM_Treasury
url = http://www.hm-treasury.gov.uk/independent_reviews/penrose_report/indrev_pen_index.cfm | format = html and pdf | accessdate = 2007-01-07 ] , published on 8 March 2004, found that the company had made over-generous payouts to policyholders and was therefore the "author of its own misfortunes".

In the light of Penrose's findings, in April 2005, Equitable Life launched a £4 billion legal action in the High Court, claiming £2 billion from 15 ex-directors who it claimed were negligent in their duties, a charge they deny. It also demanded a similar sum from its former auditors, Ernst & Young, claiming that they signed off the company's accounts without warning of the problems that led to its collapse. However, Ernst & Young said they could not have told the society anything it did not already know.

On 22 September 2005, Equitable Life abandoned its claim against Ernst & Young and made a payment to the auditors in respect of costs.

On 17 July 2008, the Parliamentary and Health Service Ombudsman issued her report "Equitable Life: a decade of regulatory failure" [cite web | title = Abraham Report | publisher = Parliamentary and Health Service Ombudsman
url = http://www.ombudsman.org.uk/improving_services/special_reports/pca/equitable_life/index.html | format = pdf | accessdate = 2008-07-18 ] after a four year investigation. She made two recommendations to the Government: that they issue an apology, and that they set up a compensation scheme.

References

See also

* Life assurance
* With-profits policies

External links

* [http://www.equitable.co.uk/ Equitable Life]
* [http://news.bbc.co.uk/1/hi/business/3547441.stm BBC News: Where Equitable Life went wrong]
* [http://www.emag.org.uk/ Equitable Members Action Group (EMAG)]
* [http://www.publications.parliament.uk/pa/cm200001/cmselect/cmtreasy/272/272ap06.htm Memorandum by Cazalet Financial Consulting] to the House of Commons (2001)
* [http://www.ombudsman.org.uk/ Parliamentary and Health Service Ombudsman] : official site


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