Page last updated at 11:02 GMT, Wednesday, 6 May 2009 12:02 UK

Renewed criticism over Equitable

Ann Abraham
Ann Abraham has been critical of the government response

The Parliamentary Ombudsman has criticised the government for sidestepping compensation for some investors in Equitable Life.

Ann Abraham also said that not all of the "injustice" suffered as a result of the saga would be put right.

Ms Abraham's report into the near-collapse of the private pension provider identified maladministration by various government departments.

Despite a government apology, she has produced a report into the response.

It is only the fifth time since the post of Parliamentary Ombudsman was created more than 40 years ago that a special report has been produced.


Equitable Life, one of the UK's largest private pension providers, came close to collapse nine years ago after being ordered by the High Court to fulfil financial promises which it could not afford.

January 1999: Equitable tries to abandon a guaranteed payment it can no longer afford
July 2000: The House of Lords says Equitable must honour its original commitments, forcing the company to put itself up for sale
December 2000: Equitable Life closes to new business after failing to find a buyer
March 2004: Lord Penrose's report says the society was the "author of its own misfortune"
July 2008: The Parliamentary Ombudsman says regulators failed to protect policyholders and calls for a compensation fund

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.

Ms Abraham's report into the affair, published in July 2008, called for an apology to those who suffered from the maladministration. She also called for the establishment of a compensation scheme for more than a million policyholders.

Instead the government has asked a former Appeal Court judge, Sir John Chadwick, to design a scheme that will give voluntary payments to the "hardest hit" of Equitable's investors. It wants compensation based mainly on hardship, rather than all losses due to maladministration by the authorities.

It also rejected all or part of five of her 10 findings of maladministration.

In January, Ms Abraham told a committee of MPs that she felt the government's response to her original report was "unsatisfactory".


Now her latest special report, called "Injustice unremedied", is planned to raise her concerns with Parliament.

We call on government to acknowledge their moral duty and accept the Ombudsman's findings and conclusions
Equitable chairman Vanni Treves

"The government's response to my report was deeply disappointing. It provided insufficient support for the rejection of my findings of maladministration and injustice," she said.

"It also begged a rather larger question as to what the purpose of regulation was supposed to be."

She said it was now up to Parliament to consider and debate whether the government's response to her report was "adequate or whether instead it constitutes an inappropriate attempt to act as judge and jury in its own cause".

She added that there was no detailed timetable for Sir John Chadwick's conclusions and that "the link between maladministration, injustice and the remedy to be provided has been broken".

"It is clear that not everyone who has suffered injustice will be eligible for a payment and that not all of the injustice suffered will be put right," she said.


Equitable welcomed the latest report on the issue of compensation for its members.

"Parliament knows that the government's response to last year's ombudsman's report is inadequate. Both its select committee and now its ombudsman have said so," said chairman Vanni Treves.

"We call on government to acknowledge their moral duty and accept the ombudsman's findings and conclusions."

Paul Braithwaite, of the Equitable Members Action Group, said: "How much longer can the government fly in the face of decency and continue denying Equitable Life victims? Now is the time for MPs, regardless of party, to support their own ombudsman and the sufferers of the injustices found by the Parliamentary Ombudsman."

The group recently announced it was taking legal action against the government over its failure to offer full compensation.

A Treasury spokesman said: "The government has the greatest respect for the Office of the Ombudsman and carefully considered her first report.

"The government has accepted that maladministration did take place and that is why we have apologised and why we have asked for independent advice from Sir John Chadwick so that we can set up a payment scheme that is fair to both policyholders and taxpayers.

"While it is clear that the process may take some time, Sir John has been asked to report back as soon as possible and to provide interim reports as his work progresses. We expect to receive the first report imminently."

Liberal Democrat Treasury spokesman Vince Cable accused the government of ducking its responsibilities, saying it must accept the Ombudsman's recommendations.

Conservative MEP Sir Robert Atkins also hit out at the government's response.

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