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&#39Author of its own misfortunes&#39

Excerpts from Treasury Financial Secretary Ruth Kelly&#39s statement to the House of Commons on Monday.

“The Government sympathises with the plight of policyholders who have suffered much worry and distress over the past four years and who have seen significant reductions in their expected income in retirement….”

“Lord Penrose&#39s central finding is that principally, the society was the author of its own misfortunes.”

“Lord Penrose makes no recommendation for the payment of compensation…nor does he conclude that economic loss was caused to policyholders by the regulatory system.”

“…it is a question of the laws that Parliament enacted and the context in which ministers resolved how those laws should be implemented which Lord Penrose criticises rather than the discrete actions of regulators…” “…it cannot be the role of the regulator to prevent all failures… Lord Penrose accepts that even had a different, proactive regime been in place earlier, no regulator can guarantee to protect consumers against concealment and manipulation…the losses suffered by policyholders are attributed to decisions made by the management of the society from the early 1980s onwards…” “Equitable&#39s current board stress that the company is solvent and policyholders&#39 interests are best served by remaining in business.”

“The Government accepts the need to re-examine the corporate governance arrangements applicable to mutual life offices in the light of the experience at Equitable Life. I can announce today a review of the governance of mutual life offices, to be led by Paul Myners, so that the boards of mutual life offices are as accountable to their members as those of comparable companies are to their shareholders.”

“It is now for the Serious Fraud Office and the DTI to decide whether a prosecution should follow.”

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