The European Parliament is to revisit its inquiry into Equitable Life next week in an attempt to force a response from the UK government on the EU's call for policyholder compensation.

Equitable Members' Action Group (Emag), which prompted the first EU inquiry of its kind in a decade in 2006, has been invited to address the parliament's petitions committee next Wednesday as the parliament seeks to assert its authority.

It follows an out-of-court settlement last week by Equitable with 407 policyholders whose class action, begun in 2004, was based on the mis-selling of with-profits annuities by Equitable's salaried sales force. Law firm Clarke Wilmott said details of the settlement were confidential, but its case had been based on the Penrose report in 2004 which first revealed that "Equitable's whole business model had been flawed"

It is seven months since the European Parliament overwhelmingly endorsed the report, which called on the UK government to accept responsibility for the insurer's near-collapse in 2000. Paul Braithwaite, secretary of Emag, commented: "The Brussels parliament has waited patiently and then rather less patiently and is now being infuriated probably because of renewed concern about Northern Rock, which demonstrates that the British single regulator clearly doesn't work."

MEPs voted last June by 602 to 13 to approve their report which called on the government to set up a compensation scheme for up to one million policyholders who lost money due to regulatory failure. Although most affected policyholders are in the UK, there were victims in 15 of the EU's 27 states, including 8000 policyholders in Ireland and 4000 in Germany.

It emerged last week that on December 5 the President of the European Parliament, Hans-Gert Poettering, wrote to Gordon Brown to express his concern about the lack of a formal response to the report, a letter which has yet to receive a formal reply.

Poettering says in his letter that the report "requires explicitly the government of the United Kingdom and the regulatory and supervisory bodies to ensure that the conclusion and recommendations of the inquiry are acted upon".

He goes on: "I understand, however, that the European parliament has, as yet, received no response to this request and that your government has stated in the press that it will await the outcome of a separate national (parliamentary) ombudsman procedure before responding "Given the date by which the ombudsman is scheduled to report, the parliament finds itself faced with the prospect of having to wait more than a year between its resolution and any formal response from the government most concerned by it.

"I would like to ask you to look into this issue and act in a way which will ensure that the authority of the parliament and of its right of inquiry enshrined in the EC Treaty do not risk being prejudiced by the lasting lack of a formal response by the British government." Diana Wallis, the LibDem MEP who led the writing of the report, commented last night: "We are trying to inject some urgency into getting a response from the British government.

"We had a full response from the European Commission, we have had nothing from the government, not even an acknowledgment."

The 373-page EU report said regulators had "behaved with undue awe or deference towards Equitable Life and apparently believed (it) to be too good and too reputable to make mistakes". This had exacerbated a "weak regulatory environment, which allowed the difficulties at Equitable Life to grow unchecked".

Equitable repeatedly slashed the value of policyholders' investments after it lost a legal battle in 2000 involving guaranteed annuity rates, sold as part of pension plans.

Since the publication of the EU report after a 15-month inquiry, to which The Herald submitted evidence in Brussels, the government has said it cannot respond until parliamentary ombudsman Ann Abraham has produced her report on the saga.

However, Abraham's report has been delayed by at least a year by the late arrival on her desk of a huge quantity of submissions by the Treasury and Financial Services Authority.

Abraham has told MPs she hopes to publish before the summer recess in July (as she said last year) but failing that, it would be October.

At the start of the year, Equitable completed the transfer of £1.7bn of with-profits annuities and 50,000 policyholders to Prudential, paving the way for a possible shutdown of the business through a sale of its remaining £7bn with-profits fund, affecting 500,000 policyholders. Vanni Treves, chairman, has said that a "data book" of policy details is now being made available to potentially interested buyers and that "2008 will decide the future of Equitable Life".