Equitable Life Unlikely To Sue UK Government

by Robin Pilgrim, LawAndTax-News.com, London

23 January 2004

Speaking on Wednesday, Charles Thompson, chief executive of the Equitable Life insurance firm revealed that even if the forthcoming Penrose Report into the near-collapse of Equitable in 2000 finds that the UK Department of Trade and Industry (DTI) was negligent during the period that it supervised the firm, legal action is unlikely to result.

Over-payment of bonuses during the 1990's, and a failure to maintain sufficient reserves for the guarantees that it had offered customers left the firm unable to honour its policy promises following a House of Lords ruling in 2000, which led to near-insolvency. The DTI has been accused of failing to question the bonus decisions made by Equitable Life, and of failing to adequately scrutinise the firm's reserves.

However, Mr Thompson explained to the UK media on Wednesday that:

"The legal tests are stiff and the burden of proof is onerous. For us and for any policy holders to take on the government, it would be a long, drawn-out, immensely expensive process with no certainty of outcome."

"The best way for all concerned is for the Ombudsman to investigate. There should be enough evidence in the Penrose report for her to do so and if it does show substantial misregulation, then there is a moral case that the government needs to answer," he concluded.

The Penrose Report, two and a half years in the making, is set to be published in February.

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