Brussels, 14/06/2007 (Agence Europe) - With only a few days to go before the vote on the final report by the EP's committee of inquiry into the crisis at Equitable Life, a British life insurance company (see EUROPE 9407 and 9423), Diana Wallis (British Liberal) summed up for a small group of reporters the main lessons to be learnt from 18 months of work. These are: - examination of the United Kingdom's transposition of the third directive on life insurance shows that there are serious failings; - the Commission, essentially through lack of resources, has failed in its role as guardian of the Treaties; - and appeal procedures for investors have not functioned as they should.
On this last point, Diana Wallis said there should be a “mechanism at European level” allowing consumers, who consider they have been caused injury during application of Community law, to group together to call for reparation. If such a mechanism had been in place when the British insurance company went bankrupt, the insured persons would have received some compensation, she said. Such a situation could also have avoided the “inequalities” between the victims of Equitable Life's bankruptcy. Richer policy holders were able to receive compensation through lengthy, costly judicial proceedings, whereas the poorer policy holders lost all or part of their savings. Ms Wallis nonetheless stressed that the mechanism to be set in place should not be the same as the American “class action” system, because of the high legal costs incurred when employing lawyers in the United States. In March, Meglena Kuneva, European Consumer Protection Commissioner, explained that she was reflecting on collective appeal mechanisms that could be used in the case of breach of consumer protection regulations (see EUROPE 9385). The British Liberal member also expressed “doubt” about the effectiveness of the FINNET network for out-of-court dispute settlement in the financial services sector intended for businesses and consumers.
Answering questions on how the lessons learned from this affair will allow European legislation to be improved in the insurance area, Ms Wallis said that the future proposal for a directive, “Solvency II”, should be based more on risk management, and should also favour “cautious supervision” on the part of national regulators. “We were encouraged by what the Committee of European Insurance and Occupational Pensions said” regarding improved cooperation between national regulators during its hearing as part of the fact-finding committee, she added. (mb)