MPs have blasted the Government’s response to Parliamentary Ombudsman Ann Abraham’s Equitable Life report as “shabby, constitutionally dubious and procedurally improper”.
In a report last year, Abraham found regulators and three Government departments guilty on 10 counts of maladministration in their oversight of Equitable Life. She called for the Government to compensate victims.
In January, Treasury Chief Secretary Yvette Cooper revealed that a scheme would be set up to make “ex-gratia” payments to investors who were “disproportionately affected”, adding that former Lord Justice of the Court of Appeal Sir John Chadwick would assess the extent of losses that could be attributed to Government mistakes.
But in a new paper published last week, public administration select committee chairman Tony Wright, MP, attacked the Government’s approach as “inadequate as a remedy for injustice” and called on ministers to rethink their position.
He said: “We are disappointed that the Government has decided that compensation is not warranted, arguing that it is under no duty to put right, even in part, wrongs that it admits the state has caused.
“The only potentially valid reason the Government provides, namely that financial regulators should not normally be held liable for financial loss, we find to be shabby, constitutionally dubious and procedurally improper.”
Wright called for the disproportionate impact test to be scrapped altogether to make the scheme simpler and urged the Government to make interim payments to policyholders who need them most.
Alan Steel Asset Management chairman Alan Steel says: “Equitable Life policyholders have been dealt a dreadful hand. It beggars belief that they are still, to this day, dramatically out of pocket.