Equitable Life — House of Commons, 2015-02-26
Topic: Domestic Commerce
Katherine Anne Green (Labour, Centre-left): I, too, congratulate the hon. Member for Harrow East (Bob Blackman) who opened the debate on securing time for it this afternoon. As we have heard, this is an issue of justice and accountability; and it is also one of confidence in the financial markets, confidence in the regulatory system and confidence that political promises and commitments will be honoured. It is particularly on the issue of confidence that I wish to focus Let me start by declaring a personal interest. For a few months in 2000, I paid into an Equitable Life pension scheme offered by my then employer. Shortly after I joined the scheme, Equitable Life closed to new business and the company collapsed. I was lucky in that I lost, I guess, only a few hundred pounds, whereas many of my colleagues, like many of our constituents, lost considerably more. In the organisation for which I worked—this was typical for many policyholders—salaries were pretty modest, so it was people on modest incomes who had set money aside, in some cases for many years, to provide for their retirement who were left significantly out of pocket as a result. In fact, the organisation I worked for was a charity. Equitable Life had made a particular effort to take a substantial share of the charities’ pensions market. That is why, as a result of the important shares and securities market, a number of former and retired charity workers are now paying the price From my own experience at that time, I view it as important to remember that in taking firm and clear action now, we send a very clear signal about the importance of tight and effective regulation. When I joined the scheme in 2000, I remember seeing advertisements all over the London underground, encouraging people to take out Equitable Life policies. It could only have been a matter of weeks before the schemes collapsed, and it is quite beyond belief that regulators and, indeed, the company’s managers, were not aware at that time that they were advertising on the basis of an utterly false premise. I can only assume that this was a desperate attempt to bring money in as rapidly and to as great an extent as possible to shore up what was well known to be a collapsing business at that time However, that was not known to customers at the time. I did not know it, as a relatively financially literate and savvy customer, so it is crucial now publicly to recognise that regulation was seriously deficient. One signal we want to send strongly from this afternoon’s debate is that we will not tolerate that kind of lax regulation again My second point about confidence and why it matters so much as we act now in response to the failure at the time is that after the collapse of Equitable Life, the organisation for which I was working—in fact, I was the chief executive—attempted to set up a new group personal pension scheme for our employees. A substantial proportion of those employees refused to have anything to do with this. They could not see the point of investing in another pension scheme when they had been so badly let down the first time. We are talking about people largely in their 30s who were absolutely turned off providing for their own retirement. I suspect that the damage to confidence in the financial markets at that time was much more widespread, going beyond just the immediate impact on the policyholders who lost out Thirdly, we need to be honest and open today about where we are going in the future as regards compensation for these policyholders who have suffered so disgracefully. All Members have constituents who feel that they were very much misled by what they understood to have been a commitment to follow through the parliamentary ombudsman’s recommendation that they should be placed in the position that they would have been in had Equitable Life not failed. They feel that what they have received in compensation falls a long way short of that. I have to say that this mismatch between the promises these people felt they had secured and the situation in which they find themselves today is contributing considerably to a loss of confidence in our regulatory system and in our political response to regulatory failure. That is important, and senior politicians need to do all they can to put it right I know that many colleagues want to contribute. I am grateful for the opportunity to participate this afternoon. I hope that a strong message will go out to my constituents and other policyholders across the country of the deep seriousness with which this House treats this matter. I know that our debate is being watched very closely by thousands of policyholders in all constituencies across the country.