A European parliament committee investigating the Equitable Life scandal pledged to scrutinise the actions of British and European regulators at its first public meeting yesterday.
The committee, which is being chaired by Fine Gael MEP Mairéad McGuinness, is examining how policyholders of the British mutual insurer Equitable Life - 6,500 of them Irish - suffered heavy losses on their pensions investments.
It is expected to invite Equitable Life mangers, EU officials, and ministers and officials from the British treasury and Department of Trade and Industry. The committee will also visit the Republic and hear evidence from some of the Irish Equitable Life policymakers who lost huge sums in the debacle.
In an address to the committee, Ms McGuinness warned investors that the inquiry did not have a compensation fund available to it to recompense investors. However, it had a duty to ensure that the questions raised by the Equitable Life collapse were answered.
"We must ensure that this sort of financial debacle does not happen again," said Ms McGuinness, one of five Irish MEPs on the 22-person committee.
About one million Equitable Life customers suffered heavy losses on their pensions investments following a House of Lords ruling requiring the UK mutual to honour guarantees made on some older policies. The ruling triggered massive cuts on the value of newer policies in 2001.
"Late joiner" Irish investors who had not been told of the company's potential £1.5 billion (€2.2 billion) liability to former policyholders when they bought their policies later discovered they were not eligible for compensation for mis-selling from the UK financial services ombudsman.
The committee's mandate is to investigate how EU directives were applied by the British regulators responsible for deciding if policyholders were eligible for compensation for their losses. The committee will also investigate if the Commission properly fulfilled its duty to monitor "the correct and timely" transposition of EU law by Britain.
The committee is due to report within 12 months but will publish an interim report after four months.
The Equitable Members Action Group, which lobbies on behalf of the insurer's policyholders, estimates that they lost up to £4 billion.
"For five years the treasury and its pals have used every Sir Humphrey trick in the book to avoid paying compensation," said general manager Paul Braithwaite.
Liberal Democrat MEP Diana Wallis, who was confirmed yesterday as author of the final committee report on the affair, said: "All options are open in terms of the proposals the committee might make; however, we should not raise the hopes of individual victims that this exercise will lead directly to them obtaining compensation.
"I emphasise that this is a Europe-wide inquiry and we will be looking at areas untouched by other investigations made to date, namely the implementation of EU law, comparing the adequacy of UK regulation against that in other EU countries, and assessing the availability and effectiveness of redress systems available across borders to victims in these circumstances."
