Thousands of Equitable Life policyholders may be eligible for compensation after the High Court last week ruled the Government had unlawfully rejected the Parliamentary Ombudsman’s findings of maladministration.
The decision, made by Lord Justice Carnwarth and Justice Gross, means that the Government has to greatly expand the number of policyholders eligible for recompense by rolling back the eligibility date to the early 1990s, as originally proposed by ombudsman Ann Abraham.
The court held that the Government had misinterpreted several of the ombudsman’s key findings and its response “lacked cogency”. It gave the Treasury 21 days to respond and outline the action it now expects to take.
The claim for judicial review was brought by the Equitable Members Action Group. General secretary Paul Braithwaite says: “The effect of the ruling is to roll back eligibility to the date originally proposed by the Parliamentary Ombudsman. This is a triumph for Equitable’s long-suffering victims.”
Abraham says: “The Government’s response to my report was deeply disappointing, providing insufficient support for the rejection of many of my findings of maladministration on the part of the regulators and my conclusions that injustice resulted from those failings. The court has now found that the Government’s response was in large part unlawful, not being supported by cogent reasons for rejecting my findings.
“While this judgment is welcome, I am very aware the injustice suffered by many people affected by the Equitable Life affair remains unremedied so many years after the relevant events. I therefore hope every effort is now made to ensure a just and speedy outcome for all those people.”
An Equitable Life spokesman says: “We welcome anything that will bring forward the prospect of proper Government compensation and closure for our long-suffering policyholders.”
In her report, published in July 2008, the ombudsman claimed there had been “a decade of regulatory failure” in the regulation of the activities of Equitable Life. She recommended the Government should pay substantial compensation to hundreds of thousands of policyholders.
In January 2009, the Government’s response rejected a substantial number of Abraham’s findings of maladministration and injustice. Instead of acting on her advice, the Government instructed Sir John Chadwick, a retired judge, to devise a compensation package within very limited guidelines.
In May this year, the ombudsman published a further report in which she criticised the Government’s response.