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Equitable Life - Three Years On

By Jane Mack (TMFJane)
December 5, 2003

Three years ago Equitable Life closed its doors to new business. And three years later the mutual's original 450,000 individual policyholders are still waiting for the results of the official government inquiry into what happened.

The report by Lord Penrose was expected in mid-summer. There's still no sign of it although the word on the street is that it will be in the hands of the relevant ministers before Christmas.

Whether Equitable Life's long-suffering policyholders will be allowed to read it in full has yet to be decided. The Government claims that it may contain confidential and/or legally sensitive information so it may not publish it in its entirety. But then they would say that, wouldn't they? Equitable Life was regulated by a government department before the Financial Services Authority took over as watchdog and it might cost them if Lord Penrose attributes any blame to them for Equitable problems.

A couple of weeks after Equitable closed for new business, a colleague wrote an excellent article about why he thought it had gone so wrong and what we should learn from the disaster. His advice for savers and investors bears repeating:

  • Don't trust a brand name. Look at the product.
  • The era of mutual societies is over. They are simply too unaccountable.
  • With-profits funds should be avoided at all costs. No one understands them.
  • Investors should have as much control over their investments as possible. That means owning equities directly or through unit trusts so that your name is clearly identified with your assets.
  • Sadly, you can't rely on the regulator to look after your interests. Make your own inquiries.
  • Don't invest if you don't understand what you are investing in
  • Don't assume today's economic conditions will last forever. They won't.

Check out our Equitable Life Discussion Board.