The European Parliament plenary has resoundingly backed the calls made by its Committee of Inquiry into Equitable Life for the UK government to compensate victims of the company’s near-collapse and for wide-ranging changes to be made in the drafting and implementation of EU financial services legislation.
On 19 June 2007, the European Parliament approved its Committee of Inquiry into Equitable Life’s findings by a huge majority (602 votes to 13, with 64 abstentions).
The case’s some 1.5 million victims across several EU countries has brought to light a number of broader, long-term concerns relating to the EU single market in services, the Committee said, with the inquiry’s findings “going far beyond the grievances raised in the two petitions to the Parliament from victims of Equitable Life’s difficulties, which prompted the investigation”.
The Parliament’s report argues that, given the British government’s “failure to comply” with EU insurance law (notably the UK regulators’ failure to ensure that Equitable had sufficient reserves to pay its policyholders), the government should assume responsibility and “devise and implement an appropriate scheme with a view to compensating Equitable Life policyholders within the UK, Ireland, Germany and elsewhere”.
Keen to build consumer confidence in a healthy European pensions and insurance market, especially given demographic trends in Europe, the report makes a raft of proposals on the nature and form of EU financial services legislation, the rights of consumers who buy financial services products in EU countries other than their own, and the role of the Parliament and Commission in monitoring the implementation of legislation in member states.
Referring to the consumer rights of policyholders outside the UK who found themselves unable even to apply for compensation when the authorities in different countries tried to shift the responsibility to each other, Rapporteur Diana Wallis said: “I think we all understand and appreciate the importance of financial services companies – and indeed other companies – being able to trade and do business across the European Union…if we are going to do this – and it is clear that we are – we have to be absolutely crystal clear who is responsible for what.”
The Committee further stated that the UK’s technique of implementing EU insurance legislation in a piecemeal fashion (through a number of different legal acts) “lacks clarity” and that “UK regulators and authorities did not adequately respect the ultimate purpose of the Directive” and that “the implementation process as a whole was flawed”.