BBC 5 Live Interview with Charles Thomson - Equitable Life's Chief Executive

“Wake up to Money”

5.38am New Year’s Eve, 2003

Verbatim and complete transcript

Interviewer Guy Rudell and Equitable Life’s chief executive, Charles Thomson:

Guy:  I asked him (Charles Thomson) just how important the outcome of the Penrose Report was to the future of his organisation.

CT:  Well, I think it’s a very important Report.  He’s got a very complex brief and we expect that his will be a very comprehensive report covering, probably, the last fifty years and telling it as he sees it.

In terms of fundamental importance to the company: I’m not sure.  I hope we have done almost all of the things that can be done towards stabilising the company, dealing with the various claims that have been made against the company and indeed the claims that the company makes against others.

There is a possibility that Penrose says that the regulator has done their job so badly that we may have grounds to pursue the regulator, on behalf of our policyholders, but that may be something of a long-shot - because legal hurdles  are very high indeed.

Guy:  And one wonders how deep your pockets are – in terms of legal fees?

CT:  We have to always look at these things as we’re doing with our case against former auditors and former directors.  It’s a question of how much the action costs, how strong the case is and whether the risk/reward of taking that action looks justified.

Guy:  The trouble is, the good performance of the stock market this year doesn’t do you ANY good at all, does it?

CT:  I’m afraid that’s right.  The economic downturn of the last three years has meant that our policyholders have suffered the downside and have a very limited upside to look forward to.

We actually sold out of most of our stocks and shares when the market was certainly above 4600 and, therefore, the further downside, and the upside that’s happened so far, are things that our policyholders were protected from anyway.

Guy:  What about the comments you were making a short while ago about there being a possibility that there might be other claims made against you?  You recently added more provision to the fund that covers those sorts of things just in case of that outcome?

CT:  We can’t know what’s going to be in the Penrose Report.  There is an outside possibility that that generates other claims against the company.  We don’t think that is particularly likely but it is a possibility that we felt we had to take into account and be open about.

Guy:  And, just a final thought, Charles:  I never really understood whether there’s any possibility at any stage of Equitable becoming, in terms of the way it invests its funds, more dynamic again – or does it have to stay FOREVER super-safe, super-conservative?

CT:  Well, I think my original ambition for the company was that it was possible to restore it to some measure of health and the economic downturn, particularly over the last couple of years, has taken that possibility, very substantially away and it’s now extremely unlikely that much can be done to recover it.

Guy:  A rather depressing note from Charles Thomson, chief executive of Equitable Life, to end on.”