“A decade of regulatory failure” - the damning verdict of the Parliamentary Ombudsman
In July 2008, after four years of Government orchestrated delays, MPs and the press finally got to read the Parliamentary Ombudsman's report into Equitable Life.
In her report the Ombudsman makes ten determinations of maladministration on the part of the former Department of Trade and Industry, the Government Actuary’s Department, and the Financial Services Authority, in relation to their regulation of Equitable in the period before 1 December 2001.
In addition to upholding several specific complaints, the Ombudsman has upheld a general complaint about the period before Equitable closed to new business on 8 December 2000, that: … the public bodies responsible for the prudential regulation of insurance companies… and the Government Actuary’s Department failed for considerably longer than a decade properly to exercise their regulatory functions in respect of Equitable Life.
Finding that injustice resulted from maladministration, the Ombudsman has recommended that a compensation scheme should be established to assess the individual cases of Equitable’s current and former policyholders, with a view to paying compensation to remedy any financial losses which would not have been suffered had those people invested elsewhere than with Equitable.
EMAG welcomed the publication of the report, saying that it was a “devastating indictment of the actions of the UK regulators over an entire decade.”
Paul Braithwaite of EMAG said: "The UK regulators were fully aware for a decade that Equitable Life was effectively insolvent, yet they allowed the company to suck in another £20 billion in pension contributions from more than a million new investors.”
The Parliamentary Ombudsman makes no estimate of the losses incurred or the cost to the public purse. EMAG has addressed both these issues in its submission to the PO, which is reproduced in full in the Report. This estimates losses incurred by policyholders at £4.65bn.
EMAG is calling on Parliament to compensate without delay those policyholders who have suffered. “Thousands of pensioners have died waiting for justice,” said Braithwaite. “It’s time the Government stopped hiding behind one enquiry after another and did the moral thing to bring this sorry saga to a close.”
The group expects the Government to resist calls for compensation and is digging in for a long fight. “While we hope that Parliament will now honour the Parliamentary Ombudsman’s unequivocal recommendation to set up a fund for compensation, we stand prepared to take the Government to Judicial Review - if that’s what it takes.”
You can download the report at: Ombudsman website
And then WRITE TO YOUR MP or MEP!