Page last updated at 14:49 GMT, Monday, 15 December 2008

MPs demand Equitable Life apology

Equitable Life sign
The near-collapse of Equitable Life affected more than a million people

A committee of MPs has called on the government to apologise for its handling of failed insurance company Equitable Life.

An ombudsman's report released in July found a "decade of regulatory failure" and identified 10 instances of maladministration by government bodies.

But last week the government delayed its response to the report.

More than a million policyholders were left with reduced retirement savings after the firm's collapse.

'Transparent compensation'

The House of Commons Public Administration Select Committee has given strong support to the scathing report by the Parliamentary Ombudsman Ann Abraham, which called for the establishment of an independent compensation scheme for those affected.

Many of those affected are no longer alive, and will be unable to benefit personally from any compensation
Tony Wright MP
Chairman
House of Commons Public Administration Select Committee

The committee said the government should accept "without delay" the findings of maladministration by the former Department for Trade and Industry, the Government Actuary's Department and the Financial Services Authority.

And it should apologise for regulatory failures and for not conducting a full investigation promptly after Equitable Life's difficulties became apparent, it said.

An "independent, transparent and simple" compensation scheme should be set up, the committee added, to provide swift redress to those who lost out.

"Justice further delayed will mean justice denied to even more people," said the committee's chairman Tony Wright MP.

Ann Abraham
Ann Abraham published her report in July

"I and the committee are acutely conscious that over the last eight years many of the million or more members of Equitable Life and their families have suffered great anxiety.

"It is unacceptable that the situation has remained unresolved for so long. Many of those affected are no longer alive, and will be unable to benefit personally from any compensation."

The committee said the cost of compensation would be high, and that payouts should only be awarded where loss could be put down to regulatory failure.

Policyholders misled

Last week, Leader of the Commons Harriet Harman said there would be no statement until Parliament returned from its Christmas break on Monday, 12 January.

Ministers have previously said that they needed time to consider a "weighty report" produced after four years of investigation.

But the Conservatives have called for an immediate statement.

"Gordon Brown has sought to block, frustrate and delay the Ombudsman's report," said shadow Financial Secretary to the Treasury, Mark Hoban.

"It is time for the Government to apologise for the way regulators have failed policyholders and establish a scheme to make payments to those who have lost out. The Government needs to take action now: Justice must not be delayed."

Equitable Life hit trouble when it was ordered by the High Court to fulfil financial promises which it could not afford.

Ms Abraham said the various regulators, such as the Department of Trade and Industry, the Government Actuary's Department and the Financial Services Authority, simply failed to use the powers available to them to protect the interests of Equitable's policyholders.

The key to Equitable's problems lay in the policy of its executives who had, for more than a decade, told policyholders that their investments were worth far more than was actually the case.

The Ombudsman, said a compensation fund should be set up for policyholders, but she did not say exactly how many people might be eligible for compensation or how much they should receive.



Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific