The long-awaited report into the problems at British mutual Equitable Life has found that the society was the author of its own misfortunes.
Equitable was plunged into difficulties into 2001 after it lost a legal battle over the rights of its guaranteed annuity rate policy holders, which left it with a £1.5 billion liability.
Today's report, by Scottish judge Lord Penrose, found that 'a culture of manipulation and concealment' on the part of some of the company's previous senior management allowed a bonus policy to develop that led to the society's financial weakening.
The report found that it was the society's own actions which precipitated its financial crisis in 2000. It also found that Roy Ranson, chief executive and actuary of the company between 1991 and 1997, failed to provide the board with pertinent information.
Lord Penrose found that the society concealed information from its regulators, with Mr Ranson 'obstructive' and 'dismissive' of regulators' concerns.
He found that the society's former management adopted a series of 'dubious' practices, many of which it concealed from its own board, its policyholders and the regulators.
The report is likely to disappoint policyholders as it makes no recommendation for the payment of compensation.
Treasury financial secretary Ruth Kelly indicated to the House of Commons that the British Government would not be compensating policyholders, saying: 'We cannot underwrite each and every company.'
She also announced separate reviews of the governance of mutual life offices, the actuarial profession and the accounting for with-profits business by life insurers.
Ms Kelly told MPs that certain key issues arising from the report could be resolved only in the courts.
'It is now for the Serious Fraud Office and the Department of Trade and Industry to decide whether a prosecution should follow,' she said.
