Irish Equitable clients unlikely to get compensation

Irish holders of policies from Equitable Life are to receive letters this week from the Irish Financial Services Regulatory Authority (IFSRA) stating that nothing can be done for them in terms of compensation.

The authority has conducted a seven-month inquiry into the issue of whether there was anything that could be done for the policyholders, after complaints made by the policyholders to the Tánaiste, Ms Harney, were referred to the authority.

Although Equitable Life may have 20,000-25,000 policyholders here, it is thought that fewer than 300 people hold the type of policies affected by the near-collapse of the life assurer in 2000.

A representative group of about 30 such policyholders has been in contact with the IFSRA about their position, after a ruling of the House of Lords in the UK in 2000 led to a reduction in the value of their policies.

The UK life assurer had a branch in this jurisdiction between 1991 and 2001, when the regulator was Ms Harney's Department of Enterprise, Trade and Employment. However, because it was a branch, the Irish arm of Equitable Life was, in essence, regulated from the UK.

During its inquiries into the matter, the IFSRA had contact with policyholders, the Insurance Ombudsman, the Consumers Association of Ireland, the UK Financial Services Authority and the assurer. It also contacted the Guernsey and German regulators, because Equitable Life also had branches in those jurisdictions.

"The conclusion is that there is nothing that can be done directly, based on powers available and jurisdiction, that could bring about an improvement in the position of the Irish policyholders," said an IFSRA spokesman.

As well as the policyholders, the Tánaiste is also to be advised of this conclusion.

The spokesman emphasised that the authority was studying the report into the affair, published on Monday by Scottish judge Lord George Penrose, to see if there were any other avenues open to policyholders. It was also keeping in contact with the UK authority.

The value of certain Equitable Life policies suffered in 2000 after the House of Lords ordered that the assurer should honour guaranteed policies sold in the high-interest years of the 1970s and 1980s. The decision cost the assurer more than £1.5 billion sterling (€2.24 billion) and the cost had to be borne by the holders of related policies.

In his report, Lord Penrose criticised Equitable Life management for the crisis and said regulatory failings were "secondary factors". He found that a culture of "manipulation and concealment" among senior management ultimately led to the financial weakening of the Equitable Life.