In the line of fire

When Vanni Treves takes over as chairman of Equitable Life, his life promises to be anything but. Can he turn the tables on the headline writers?

Offering me, in his words, a “warm and soothing” cup of camomile tea, is the man that a headline in The Mail on Sunday labelled a bully. Macfarlanes former senior partner Vanni Treves is anything but – camomile tea doesn’t exactly scream aggression, does it?

But then Treves is gearing himself up for what he confidently predicts will be an enormously difficult job as the new chairman of the beleaguered Equitable Life, and bad press is bound to be a part of that. He puts the headline down to a need to sell newspapers, but has nevertheless put a call in to the journalist in question. “My worst enemy wouldn’t call me a bully in the conventional sense,” he states, before pointing out that the same piece describes him as urbane – surely a contradiction.

The accusation comes after Treves wrote an open letter to the national newspapers asking policy holders to vote for a compromise on the guaranteed annuity rate (GAR) policies that forced the insurer to put itself up for sale. If the vote goes against him, there are few options left.

This week he is due to start a nationwide “roadshow” which, along with the open letter, was his idea. The tour will be his opportunity to “look [the policy holders] in the eye and say, ‘This is who I am, this is my experience, back me if you want'”.

At face value, it is very difficult to see why Treves has taken the job. He does not expect to have any fun whatsoever doing it, “and if I did have some fun, I probably wouldn’t notice it”. And given the list of other part-time jobs he has, Treves will never find himself at a loose end.

Treves has been chairman of Channel 4 since 1998, and became chairman of the London Business School in the same year. He is on the board of the College of Law as well as a handful of public and private businesses. His roles as governor of Sadlers Wells and the National Portrait Gallery – the jobs he does “for fun” – will now have to take a back seat.

Treves finds his reasoning behind saying yes to Equitable Life hard to articulate. “It’s very difficult to explain why I took the job without angel choirs breaking into song,” he says, gesturing out of the window, as if expecting cherubim and seraphim to waft their way down from Holburn Circus.

During the interview, Treves makes several attempts to explain why, but is clearly worried about making himself and Macfarlanes sound holier than thou. But basically, the gist is that the job was important and needed doing, and if the powers that be believe that Treves is the man for the job, then who is he to stand in the way?

He stresses that it was not accepted to command a client relationship for Macfarlanes, nor is it for the money. The partnership, rather than Treves as an individual, was originally offered £300,000 for lending him. “That was thought by the partnership to be too much for something that was essentially pro bono work,” explains Treves. “So Macfarlanes are receiving £60,000 with £250,000 payable on results.”

If the results are not what Equitable Life is hoping for, then Treves has insisted on a one-day notice period without compensation in the contract.

The Macfarlanes partnership, known as one of the tightest in the City, has been amazingly supportive, says Treves, who adds that he is very proud of the firm for immediately recognising that he should do the job. Unusually, a full partnership meeting, normally reserved for partner appointments, was held to discuss the role, such was its potential impact.

Treves, and the firm as a whole he says, believe that the fate of Equitable Life will affect more than just the policy holders, which is why he has taken the job. “I’m a City creature and a City beneficiary, and this firm is a beneficiary of the reputation of the City. Equitable Life has sullied the reputation not only of the financial industry, but of the financial strength or financial good name of the City. That is something I care about.”

Treves searches for a “better way” of saying that he is acting in the public interest. “If that amazes you, then so be it,” he shrugs.

What is amazing is that it doesn’t amaze me. I can understand Treves’ concern about finding the right words because, on paper, the reasoning makes him look like a pompous do-gooder. In the flesh, however, he seems like a man driven by an innate sense of duty, both to the City and Equitable Life’s many policy holders.

As has been widely reported, Treves has relinquished half of his GAR policies and converted them to non-GAR ones so that he cannot be accused of bias. He did not realise that they were GAR until he came to accept the job and asked. “I hadn’t the faintest idea,” Treves admits. “But I was told that from 1982 onwards you were automatically given a GAR. They were core product.”

So where does he place the blame for Equitable Life’s cataclysmic fall? Squarely at the doors of the House of Lords, whose “abberrational judgment” was not predicted by the society, its advisers and actuaries, the Financial Services Authority or the rest of the industry. The judgment that treating GAR and non-GAR policy holders in different ways was inequitable cost the society £1.5bn rather than the £200m it had put aside.

“I understand that there are a lot of angry policy holders, but the society was very unlucky,” says Treves, his calm demeanour rippling with the perceived injustice.

Now the press has found a whipping boy, Equitable Life is in for a long rocky ride, with the press picking up on the Office of Fair Trading’s inquiry into the fairness of its exit charges.

Following the House of Lords’ judgment the penalties were set at 10 per cent, but Treves states that the society did not charge exit penalties before and that many other societies do exactly the same thing but are just better at hiding it.

He is also very aware that many of the quotes in the negative press articles come from independent financial advisers, who do not benefit from the Equitable Life policy of not paying commission, and so have a vested interest in policy holders moving their money. But given that the job has failed to give him a honeymoon period, Treves says that he is not bothered by the prospect that the position might prove less than enjoyable.

“Many younger people could not dream of doing this job for fear that it went wrong and therefore their future would be stultified,” says Treves, leaning back in his seat with his arms folded behind his head. “If this doesn’t work as I hope it will and I don’t make as much of a success of it as I would like, then I’ll regret nothing. You can only have that approach when you’ve already done certain things in life.

“This is a job for a man of my age,” he adds. “I don’t wish to sound patronising, but it is. I will not lose one minute’s sleep over it.”
Vanni Treves
Equitable Life