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Abraham reopens Equitable inquiry with GAD warning

The number of IFAs able to get professional indemnity insurance has increased, according to figures from the FSA.

The monthly figures normally show that around 700 firms do not have cover but June&#39s figures showed a fall of nearly a third to about 500.

Aifa director of policy Fay Goddard believes the fall is due to restored confidence in the PI market as insurers are starting to understand the endowment position and are assessing the risk as minimal.

She says the fact that 80 per cent of cases going to the Financial Ombudsman Service find in favour of the IFA is reaching the PI market and that insurers are less sensitive.

Goddard says the slow resolution of the splits&#39 deb-acle is another reason that the market is less nervous.

She says: “In the last few weeks, people have started to get better terms. This is a sign of restored confidence from PI insurers and is good news as a more open market will drive competition.”

Parliamentary Ombudsman Ann Abraham will reopen her investigation into Equitable Life, raising the hopes of policyholders looking for compensation from the Government.

However, Abraham warns that she will not hold an investigation if the Government den-ies her request to extend her remit to include the Government Actuary&#39s Department.

She says that the inclusion of the GAD is crucial to determine whether there was maladministration by the prudential regulator.

The investigation will examine the roles played by the Treasury, the Department of Trade and Industry and the GAD which were responsible for regulating aspects of Equitable before December 2, 2001 when the firm closed to new business.

Abraham has already vindicated the FSA which reg-ulated Equitable between 1999 and 2001, finding no evidence of maladministration.

If the investigation finds fault with the regulators, Abraham could call for compensation to be paid.

The Government has so far made no commitment to honour any recommendations made by Abraham but the Conservatives and Liberal Democrats have said they will support her conclusions if elected.

Abraham has performed a U-turn after concluding at the end of her original report in June last year that she would not look at Equitable again.

Equitable Members&#39 Act-ion Group chairman Paul Braithwaite believes Abraham has a difficult task ahead and says he is concerned that she has not yet set a date when her inquiry will start.

Braithwaite says: “The FSA and Treasury were opposed to the reopening of the inquiry and the Parliamentary Omb-udsman will have a difficult time investigating these leading suspects.”

Equitable chief executive Charles Thomson said: “Our policyholders will be pleased that a fresh, independent rev-iew is under way that can det-ermine whether the regulators were at fault and Government compensation should be payable.”


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