The European Commission confirmed yesterday that it would oblige the British government to treat Irish investors in Equitable Life on the same basis as UK customers, leading to fresh hopes of compensation for Irish residents who lost out as a result of the crisis at the mutual insurer.
The European Parliament's petitions committee met in Brussels yesterday to debate two petitions relating to alleged negligence by the British government in its regulation of the company.
A temporary committee with responsibility to investigate matters relating to the Equitable Life saga will now be set up.
Labour MEP Proinsias De Rossa, who sits on the petitions committee, said the commission has confirmed an assurance made to him in June that it would require the UK's parliamentary ombudsman to pay compensation to Irish Equitable members were it to do so to UK members.
Mr De Rossa called on the Government to appoint an investigator to represent Irish citizens' interests and, if necessary, initiate legal proceedings against the UK authorities.
An estimated 6,500 Irish residents suffered heavy losses on their pensions investments following a House of Lords ruling requiring Equitable Life to honour guarantees made on some older policies.
That ruling eventually triggered huge 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 subsequently discovered they were not eligible for compensation for mis-selling from the UK's financial ombudsman service.
A petition taken by the Equitable Members Action Group (Emag) called on the European Commission to bring legal proceedings against the UK government for its failure to provide proper regulation to over 15,000 non-UK investors.
Complaints have also been made to the UK parliamentary ombudsman, which is now conducting a second inquiry into the Equitable affair.
This investigation will cover the regulatory handling of the non-UK customers.
"These people had invested their savings in what seemed to be a properly regulated company and assumed it was covered by European law," Mr De Rossa said.
"They had no way of knowing that it was being so badly run that their future financial security was at risk, and that the UK authorities would effectively wash their hands of them."
Fine Gael MEP Mairéad McGuinness, who also sits on the EU petitions committee, said the debacle raised huge questions over shopping across borders for financial services like pensions.
"The regulatory framework which allowed this to happen to investors in Equitable Life has failed... Perhaps it is time to ask who regulates the regulators."
