Public accounts committee chair Margaret Hodge has warned the Government it “needs to think again” about using the same actuarial firm to calculate Equitable Life compensation payouts and to advise on appeals against those decisions.
During a PAC hearing yesterday, HM Treasury director for business and international tax Mike Williams said Towers Watson is responsible for both calculating compensation payouts for Equitable Life customers, and assessing the validity of an appeal.
Hodge said she would be concerned about the fairness of the process if the same firm was advising on payouts and appeals.
She said: “So the person who takes the decision then gives the advice on the appeal. It does not sound very brilliant.
“An appeal mechanism that is advised by people who took original decision does not smell to me like an independent appeals process. You may need to think about that again.”
Of 500 appeals only 11 have been upheld.
Williams defended the independent review panel saying it is staffed by people from a range of backgrounds, hired through an open application process.
Hodge also raised concerns the calculations behind the payouts were so “obscure” that claimants could not work out independently how much compensation they were due.
Williams said examples setting out compensation due in certain circumstances have already been made public. A step-by-step guide to working out an individual payout has also been produced and is currently being looked over by Equitable Life campaign group EMAG.
Hodge said the “suspiciously” complex calculations behind the payouts and the fact the same actuarial firm advises on payments and appeals is undermining trust that the system is “just”.
She said: “Go away and see if there is a way in which you can support the concern to see a bit more transparency to make sure people are being treated fairly. That is what this is all about.”
Towers Watson declined to comment.