Mairead McGuinness Fine Gael MEP

Following the publication of a UK report recommending the basis for Equitable Life compensation payouts, Mairead McGuinness, Ireland East Fine Gael MEP who chaired the European Parliament inquiry into the debacle, has written to the UK Treasury seeking clarification in relation to overseas policyholders.

In a letter today to Mark Hoban, MP, Financial Secretary to the Treasury, McGuinness asks him to confirm that all policyholders will be treated equally regardless of where they live.

Over one million UK policy holders and more than 15,000 in other EU countries, including 6,500 in Ireland, incurred losses to their pensions, savings and investments.

While the estimated total losses were five billion pounds (GBP), the Coalition Government in the UK announced in October that £1.5billion would be paid to the victims and the relatives of those who died waiting for compensation.

McGuinness said this week’s Independent Commission report relates to how stg. 775million of the total compensation package should be distributed.

“What is clear is that many will receive substantially less money than they lost. It sets out the concept of ‘relative loss’ – the difference between the returns policyholder got from Equitable and the amount they would have received if they had invested their money with another company.”

She said the remainder of the £1.5billion compensation fund will go to 37,000 pensioners who cashed in their pension pot with Equitable, buying a with-profits annuity. They will be compensated in full.

“However, there is no basis whatever for treating people with the same type of policies differently because they live in different EU countries,” she said.

The European Parliament’s Inquiry which McGuinness chaired recommended full compensation by the UK Government for victims on the basis of failures found (see * below). The findings were echoed by the UK Parliamentary Ombudsman Ann Abraham.

* The European Parliament report found that the UK regulators did not properly supervise Equitable Life, they failed to challenge the dual role of the Appointed Actuary, they took no account of non-contractual bonuses, they focused too narrowly on solvency margins and were too lenient with what they let Equitable put into the margins, rendering them misleading and endangering policyholders reasonable expectations.

Another key finding of the McGuinness report was that a clear gap exists between home and host supervision of insurance products.