Equitable life chairman Vanni Treves & Co were in need of a PR boost last week. Prev-iously they had cleverly, sorry, cynically, announced a £2.6bn lawsuit against Ernst & Young, Equitable's former auditor, at the same time as slashing policyholders bon-uses and hiking their MVA to 14 per cent.
It came just weeks after they had been reassuring people that the compromise deal designed to cap Equit-able's parlous liabilities would make everything much better.
While policyholders' latest financial sting may have initially been obscured by the E&Y lawsuit, the reality of the situation has started to sink in.
Questions are being asked about the way Equitable handled the announcement. One wonders if its board have been seeking advice from Stephen Byers' hapless Department of Transport.
But what better way of taking the heat off itself than by announcing another lawsuit. This time against 15 of the society's former directors who were in charge when the house of cards was blown over. Let the courts now decide once and for all if it was their fault. If it was, punish them financially.
On the face of it, such a decision should delight all policyholders who have suffered as their savings have gone up in smoke. But, in reality, this is a high-stakes move. In typical Equitable fashion, the society has declined to say whe- ther these directors were covered by liability insurance des-igned to protect against just such a lawsuit.
Responsible companies tend to offer some protection to their directors although by no means as much as in the US. Some prudent individuals may even take out personal policies.
But the IFA struggling to cope with rocketing PI charges may not be pleased to learn that there is no compulsion to do either. The former Equitable directors are by no means short of cash, unlike, for example, Equitable with-profits annuitants, but most could hardly be bracketed as among the mega-rich.
Despite any other alleged failings, one sin that Equitable directors could never be accused of committing is overpaying themselves.
Even if they had some insurance protection, it is unlikely to pay out anything approaching the £2.6bn the lawsuit is pursuing the directors for. I am reliably informed that there is no policy on the London insurance market covering directors of UK com-panies for more than £40m.
Despite Treves being a highly successful lawyer with an undoubtedly keen know-ledge of the price of high-quality legal advice, Equitable has declined to give any figures on much such a case might cost policyholders. Nor has it disclosed how much Herbert Smith has been paid for reviewing the evidence in the first place. You are left asking the question, if the numbers do not add up, why ever not?
The financial case for taking legal action against E&Y is obvious. Equitable is unlikely to recover anything like the £2.6bn it has claimed. E&Y, as a global organisation, has the resources to negotiate a reasonable settlement if it should decide that it is in E&Y's interest. The difficult question that still has to be answered when suing them is, regardless of the rights and wrongs, whe-ther it is cost-effective. I suspect that, on balance, the decision was a marginal one.
Regardless of their cynical PR tactics and their disgraceful secrecy, Treves & Co should not have to face this dilemma. If the directors were at fault, and that is for the court to decide, they should provide some form of redress to the individuals affected by their decisions, just as an IFA or many other professionals have to provide redress if negligent advice causes their clients harm. It is extremely rare for directors who have been in charge of companies which foul up to be brought before the courts.
They sometimes lose their jobs but, while most have enough cash to make this less than a disaster, they usually do not have enough to make suing them worth the effort.
That must change. While I am no fan of a compensation culture, if things go wrong at a company and directors are at fault, they should pay redress to those who suffer as a consequence, as many individuals in the professional sector already have to do.
Company directors should be forced to have insurance cover to deal with this. This would make it cost-effective to sue them. Such insurance would certainly have a reasonable excess attached to it, making sure that directors can be penalised without necessarily bankrupting them.
Directors are usually very well paid and they face high levels of pressure and punishing work schedules. But they are keen to justify their high salaries by talking about the responsibilities they face. Those who suffer when they fail in those responsibilities should be able to seek redress.
James Moore is insurance correspondent at The Times