Ombudsman slams Eq Life compensation plan
Share
Parliamentary Ombudsman Ann Abraham has slammed the compensation plans which could see Equitable Life victims entitled to just £400m, claiming their basis is “unsafe and unsound”.
Last week Sir John Chadwick published recommendations to the coalition Government over compensation for Equitable Life victims, which calculated that total pay-outs could be just £400m-£500m – just a tenth of the £4.8bn which the Equitable Members’ Action Group says policyholders have lost.
Abraham says that as the coalition Government committed itself to implementing her recommendations in full, Sir John Chadwick’s terms of reference are flawed because they are based on the previous government’s rejection of several of her findings.
In a letter to MPs responding to the report, Abraham says: “Those proposals, if acted upon, would not in any sense enable fair and transparent compensation to be delivered.”
Abraham says the Chadwick report “misinterprets” several of the conclusions from her own report of 2008, and “ignored” others.
Abraham says that despite the fact she offered her assistance to the Chadwick process, “Sir John has explicitly rejected those explanations and that assistance and has substituted his own interpretation of these matters without seeking my further comments.”
She says: “I find these flaws particularly concerning, providing as they do the basis for the central and more controversial proposals within the report.”
Abraham adds: “For these reasons, the Chadwick proposals seem to me to be an unsafe and unsound basis on which to proceed.”
In January 2009, the Labour Government rejected a substantial number of Abraham’s findings of maladministration and injustice.
It commissioned Chadwick to devise ex-gratia payment scheme within limited guidelines. Emag withdrew from working with Chadwick’s review of compensation in March, labelling his work a “Treasury stitch-up”.
The group won a High Court challenge last year, which found the Treasury’s brief to Chadwick was unlawful and forced the remit to cover all investments back to 1991 rather than 1999.
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
Readers' comments (2)
Julian Stevens | 26 Jul 2010 2:47 pm
Neither we or Equitable's policyholders should ever forget that the failure of Equitable Life was, in no small measure, due to incompetence on the part of the regulator, against which there appear to have been no sanctions whatsoever. The big salaries and guaranteed bonuses, amongst much else, have continued unabated ever since.
My theory when the news of Equitable's imminent failure broke, was that the FSA finally realised that it had been fed a load of false rubbish by the board of Equitable Life (and had swallowed it hook, line and sinker).
But, by then, the ship was so fatally holed below the waterline that the FSA decided it was too late for any sort of meaningful regulatory intervention. So what did it do instead? It just stood back and let it go down with all hands on deck.
And has the FSA improved since? The crisis of the banking sector in general and of Northern Rock in particular suggest not.
And this is what Crash Gordon described as "A world class regulator". I hardly think so.
Unsuitable or offensive? Report this comment
Mr Fisher | 26 Jul 2010 3:24 pm
It was worse than that Julian they did not just stand back and watch the ship sink. They threatened penal action against any firm taking survivors off with longboats.
Unsuitable or offensive? Report this comment