Forum Brief: Penrose report

Following publication of the Penrose report, the government has attacked former ministers, financial regulators, the bosses and management of Equitable Life.

Treasury financial secretary Ruth Kelly highlighted a catalogue of failures that led to the mutual society almost failing to meet guarantees on the pensions of thousands of people because it did not have enough funds.

Party Response: Liberal Democrats

Vincent Cable, Liberal Democrat Treasury spokesman, said: "Equitable Life is a major scandal and the Penrose report has major implications not just for the 800,000 plus policy holders, but for future confidence in private pensions and the products of life insurers in general.

"Penrose has found failures in the regulation of Equitable Life. Although the report does not make recommendations on compensation it confirms that policy holders have had much worry and distress with many experiencing real financial hardship.

"The government reaction to the Penrose report is a total whitewash and seeks to distort Lord Penrose’s findings. It ignores the specific criticisms of government regulation by seeking to pretend the financial plight of Equitable Life policy holders is solely the consequence of the regulatory system, which was in place from the former Conservative government."

Forum Response: Association of British Insurers

Mary Francis, director general of the ABI, said: “The report confirms that Equitable’s problems, particularly its policies of over-promising and under-reserving, were unique to that company. The regulatory regime has changed beyond all recognition under the FSA. The further reviews announced by Ruth Kelly seem sensible, but they must avoid imposing costly or unnecessary burdens on the rest of the industry.”