SFO forced to justify lack of Eq Life criminal probe

The Serious Fraud Office (SFO) has been instructed to release potentially sensitive documents about the downfall of Equitable Life following a Freedom of Information (FOI) request.

In a detailed letter , the Information Commissioner (IC) rules the SFO must release a vetting note explaining why it refused to carry out a criminal investigation into the insurer's conduct.

The SFO had claimed that releasing the information would prejudice its ability to conduct effective investigations and potential prosecutions.

No such prosecutions have taken place for over a decade, however.

Following the FOI request, the letter says the Commissioner found "some information was incorrectly withheld" by the SFO.

The Fraud Office has 35 days from the date of the ruling, 3 March, to comply with the IC's decision and release the vetting note.

The note relates to the SFO's preliminary investigation into Equitable Life in 2004, which it closed a year later after the Fraud Office decided no criminal investigation into the insurer's collapse was needed.

In December 2005, the SFO said: "Following careful consideration of the available evidence, the SFO confirms nothing has emerged which would justify a full criminal investigation in to the affairs of the Equitable Life Assurance Society."

It is not yet known who submitted the FOI request.

Paul Braithwaite, general secretary of the Equitable Members Action Group (EMAG), says: "There are policyholders out there who believe there was a conspiracy between the regulators and Equitable Life.

"I believe there is a difference between criminal fraud and a looser definition of fraud; I do not believe anyone siphoned off money here.

"But I do think there was a conspiracy of silence between the regulators and Equitable Life."

Equitable Life's downfall came after it failed to allow for the impact of adverse market conditions on large unhedged liabilities, which were linked to its guaranteed fixed returns to investors.

The October 2010 Spending Review by the coalition government announced compensation of £1.5bn for Equitable Life investors but Towers Watson calculated the overall loss at £4bn-4.8bn.

At its peak, Equitable had 1.5 million policyholders with funds worth £26bn under management.