Page last updated at 08:20 GMT, Thursday, 19 March 2009

Equitable plan inadequate say MPs

Ann Abraham
MPs backed the Ombudsman's criticism of the government

A committee of MPs has again denounced the government for disclaiming responsibility for the collapse of the Equitable Life pension company.

Last year, the Ombudsman called for the establishment of a compensation scheme for more than a million policyholders.

But the public administration committee says it is "deeply disappointed" with the government's response.

The government is planning a much more limited scheme, which the MPs says is "inadequate as a remedy for injustice".

Vanni Treves, Equitable Life's chairman said: "We are grateful to the select committee for a report which lays bare the disgraceful manoeuvrings of a government trying to wriggle out of its responsibility to address the failures of its regulators."

"In the light of this extraordinarily damning report, we call on the government to think again and to accept the findings of the Ombudsman," he added.

Denial

Equitable Life, one of the UK's largest private pension providers, came close to collapse in 2000.

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The subsequent saga saw more than a million policyholders suffer large cuts to the value of either their prospective or current pensions as the society struggled to stay solvent.

The Parliamentary Ombudsman, Ann Abraham, investigated the issues and last year ruled that various government departments had been guilty of maladministration, contributing to the society's near collapse.

However the government continues to deny some of her findings, and is going only part of the way to carrying out her recommendation for compensation.

The public administration committee, in its latest report "Justice denied?", said the government's stance was "morally unacceptable."

And it said the government continued "to act as judge on its own behalf," echoing the view of Ms Abrahams that it had misrepresented the findings of her crucial report.

In January she told the MPs on the committee that the government had been "picking over and re-interpreting my findings of maladministration and injustice, re-arranging the evidence, re-doing the analysis and acting as judge on its own behalf".

Compensation?

A former Appeal Court judge, Sir John Chadwick, has been asked by the government to design a scheme that will probably give voluntary payments to only some of the Equitable's investors.

The committee chairman, Tony Wright MP, said: "I give credit to the government for apologising, for producing a considered response, and for accepting the need for some kind of payments scheme."

The committee said this was "probably the best that policyholders are going to get".

But it said they wanted it to be both simple and clear because the government's approach might be complex, "slow and onerous" for the policyholders.

They said the scheme should not rely on some form of means testing, which they believe will involve too much information being required before any compensation is issued.

Last year the committee published another report, criticising the government for its delay in responding to the Ombudsman's findings.

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