12. The Ombudsman's report received a strong welcome
from Equitable Members Action Group (EMAG), which stated: "We
have nothing but praise for the quality of the work that Ann Abraham
has done" and
"After so many whitewashes, cover-ups, and delaying actions,
EMAG congratulates the [Parliamentary Ombudsman] upon having the
courage and integrity simply to tell the truth".
13. Equitable Life's Chair, Vanni Treves, is also
reported as saying that the Ombudsman's "reasoning and recommendations
are beyond argument".
The board of directors has added: "If the Government fails
to respond positively to a report from Parliament's own Ombudsmana
report which so thoroughly and unequivocally describes a 'decade
of regulatory failure'we will fail to understand and to
explain to our policyholders what the point of the role of the
14. The report has not received universal support.
For instance, Sir Howard Davies, who was Chair of the Financial
Services Authority at the relevant time, has rejected the findings
made against the FSA;
other commentators and interested parties are divided over the
case for compensation more generally.
15. We had hoped to receive the Treasury's response
to the Ombudsman's report in time for us to consider it as part
of our inquiry. The report has been publicly available since July
2008 and we are aware that the public bodies have been working
on their approach to the issue of compensation since at least
February 2008. The
Economic Secretary to the Treasury has previously promised the
House a response "in the autumn".
Ian Pearson MP, the current occupant of that post, has since told
us that a response will be made as part of an oral statement to
the House of Commons on or if possible before 18 December 2008.
He also stated that the Ombudsman's report raised "very complex
and technical" issues forming part of a "unique set
of circumstances", which the Government is committed to examining
fully. He disagreed
that a period of four months to reply represented unreasonable
delay in the circumstances, but acknowledged the concern of policyholders
that the situation had been going on "for far too long".
16. In particular, Equitable Members' Action Group
has estimated that around 15 members of Equitable Life are dying
each day, with more than 30,000 having died since Equitable Life
closed to new business in 2000. The new board of Equitable Life
has stated: "It is certainly disappointing and some would
say unconscionable that after a further three and a half months
[i.e. now four and a half months since the Ombudsman's report]
there is still no response".
17. We congratulate the Ombudsman on her comprehensive
and compelling report, Equitable Life: a decade of regulatory
failure. The report paints a damning picture of the prudential
regulation of Equitable Life throughout the 1990's and early 2000's.
In short, the members of Equitable Life were seriously let down
by the Financial Services Authority, the (then) Department of
Trade and Industry, and the Government Actuary's Department. We
support her recommendation for a full and unreserved apology from
those public bodies concerned.
18. It is disappointing that the publication of
the Government's response has been delayed. While the Ombudsman's
report raises complex issues, the Government has had sight of
her report for many months. There can be few cases more deserving
of a prompt response than the present, particularly given the
increasing age of the policyholders and the length of time that
they have waited already. We do, however, welcome the fact that
the Government seems to be treating the Ombudsman's report with
the seriousness it deserves, and we look forward to the publication
within the next few days of a what we trust will be a thorough
and well-reasoned response.
19. The remaining sections of this report are primarily
concerned with exploring the Ombudsman's second - and central
- recommendation for the creation of a compensation scheme. Our
report then goes on to consider the lessons that must be learned
from the Equitable Life affair.
20. Allegations have been raised with us which fall
outside the scope of the Ombudsman's reportin particular,
that the failings of the prudential regulators went beyond maladministration
and involved misfeasance in public office. These are not issues
that we have been able to investigate or on which we can reach
a considered judgement.