Equitable Life - Public Administration Committee Contents

Examination of Witness (Questions 36-72)

John Chadwick

14 October 2010

Q36 Chair: For the record, could you very kindly identify yourself?

Sir John Chadwick: I am John Murray Chadwick and I have recently delivered an advice to the Government following terms of reference given to me in January 2009.

Q37 Chair: Sir John we are very grateful for your appearing as a witness, particularly as you have fundamentally completed your work for the Government and therefore this is an "extracurricular" visit. Are you appearing on behalf of yourself or are you appearing on behalf of your client?

Sir John Chadwick: I have no client. I am not appearing on behalf of the Government. I am appearing in response to your invitation to give you such assistance as I can.

Chair: We are extremely grateful to you, Sir, and if we may, we may ask for your opinion on issues that are wider than your original remit, as I think it would be very much in the public interest to have your advice.

Q38 Robert Halfon: Good morning. EMAG have conceded that the calculation of external relative loss is the only part worth salvaging, but they consider that it is a significant underestimate because it excludes the exit penalty fees, the first 18 months of losses and also those already invested at July 1991. How far do you think that these factors should be taken into consideration? And if none, why not?

Sir John Chadwick: I think first of all one has to be fairly clear what you are trying to measure. What I was trying to measure was the extent of loss that would not have been suffered if policyholders had been invested elsewhere. I was not seeking to measure the gains that might have been made had policyholders been invested elsewhere. The question that I was asking myself was, "What loss did they actually suffer?" and that is largely the loss suffered as a result of policy value cuts in 2002 through to 2004.

I then asked myself, "Would they have suffered that loss, or as much a loss, if they had been invested elsewhere?" That is where a comparison between the policy in which they were invested, Equitable Life, and the policy in which they might have been invested elsewhere would have led you. In making that comparison there are some quite difficult questions to determine. Towers Watson have set out the sort of questions that need to be determined. They are essentially questions for actuaries and I have accepted that advice.

As to the start date, which I think is perhaps the first limb of your question. The problem that arises from the start date is this: if you ask yourself the question, "At what point could people have been affected by misinformation in regulatory returns?" the answer, as it seems to me, is, "When the regulatory returns as published would first have been different." It is that consideration which leads me to a start date in 1992 rather than 1991. If you ask a rather different question, which is, "Would Equitable Life have been managed differently from an earlier date?" then the answer is, "Yes, it probably would have been managed differently from an earlier date had maladministration not occurred." But the fact that it was being managed differently would not have come into the public domain until the regulatory returns were published. So I have taken the view that there should be some mechanism for compensating those who came into Equitable Life before the middle of 1992, and in particular, those who having come into it could not ever get out, and they are the with-profits annuitants. That is what I have described in my advice as "internal relative loss".

The effect of bringing that into account is that you alter the balance between policyholders. Some policyholders get more, or indeed get something; others may get less because they have made gains. I hope that has understood your question and responded to it.

Q39 Robert Halfon: Thank you. Equitable Life broadly accepts the Towers Watson figure of around £4 billion to £4.8 billion as the estimate for relative loss, but it suggests it needs adjusting to reflect the Ombudsman's description of relative loss. Do you agree with that?

Sir John Chadwick: No, I don't actually agree with either of those points. I don't think Towers Watson do accept that. If you look at the letter of 21 July, which is where that figure comes from--and it is the only place that figure comes from--Towers Watson explain what it is they are measuring, and they also explain that what they are measuring has no relevance to my advice, because it is not what I regard as relative loss, and they don't describe it as relative loss in their letter.

Q40 Chair: Could you explain a bit more about that? What do they describe it as? Why have we all got obsessed with this figure if it is not the relative loss?

Sir John Chadwick: The reason I suspect everybody is obsessed by it is because it is a very big figure and far larger than any other figure, and that is why everybody is focused on it. But if you actually look at the genesis of that figure, it is Towers Watson's assessment of what it would cost to put every policyholder in the position that he would have been if he had invested not in Equitable Life but in a comparator.

Q41 Chair: That figure would seem to reflect the starting point of the Ombudsman.

Sir John Chadwick: It may well be the starting point of the Ombudsman's compensation scheme, but it is not the concept that she defines as relative loss. Her definition of relative loss, and it is explained in some detail in my advice, is that you ask yourself whether the policyholder has lost at all and then you ask whether he would have lost as much as that if he had been somewhere else. That is measuring relative loss. It might help you if I try and illustrate it by an example in a quite different field.

Suppose you had an investor who wanted to invest £10,000 in an oil company. He looked at the newspapers and he saw that Oil Company A was advertising that it had just struck oil, so he put his £10,000 into Oil Company A. In fact, three months later, it turns out that Oil Company A had not struck oil, so the information in the advertisement was misleading. The value of his shares goes down. Suppose for the purpose of the example they go down from £10,000 to £8,000. Now on a very simple approach you would say he had lost £2,000. The Ombudsman's concept of relative loss, which she spells out very clearly in her report, is this: ask yourself whether oil companies generally were doing badly over the period, and if you find that oil companies generally were going down over the period and would have gone down 5%, you would have found that an investment of £10,000 would have only been worth £9,500 anyway at the relevant date. So the loss that you have suffered by being in Company A, as opposed to being in some other company, is not £2,000; it is the difference between £8,000 and £9,500, so it is £1,500. That is how relative loss is defined.

To carry that example a little further, suppose that, instead of doing badly, oil companies generally are doing well and that their shares are going up by 10%. So had you put your £10,000 into another oil company you would have ended up with £11,000 instead of £8,000. Now, is your loss in that situation to include the £1,000 gain that you did not make because you were not in another oil company? So do you measure loss at £3,000, which takes account of the gain that you never made, or do you measure it at £2,000 which is the loss you have actually made on your investment?

The £4.8 billion figure is measuring loss by reference to the second of those examples, and it is making the assumption that everyone would have invested elsewhere than Equitable Life. The £1,500 figure that I put before you a moment ago is measuring what the Ombudsman's Report actually defines as relative loss. I can, if it helps, take you to the paragraph in the report that does that, but it's all in the advice.

Chair: Does my Committee share my misunderstanding of this?

Q42 Charlie Elphicke: As I understand it, if you took a legalistic approach you would say in the case of the first oil company, where you effectively lose £2,000, you were to be compensated for that; it is the diminution in value, probably plus interest. That would ordinarily be the appropriate legal test, rather than a relativity test that the Ombudsman has generated. Would that be correct?

Sir John Chadwick: If you were asking my view as a lawyer, which was not the basis upon which I was writing my advice, I would say to you we would not be going in this direction anyway. I was not seeking to advise as to what a court would do because it is by no means clear that the court would recognise that this sort of loss is capable of being compensated as a matter of law. If it did, then it might measure loss in quite a different way: that which has been developed through the cases.

What I was seeking to do was to answer the question that was put to me in my terms of reference: assess relative loss. Now my terms of reference don't define relative loss, so I looked to the Ombudsman's Report to find what relative loss means. It's not a term that has any meaning to a lawyer, so in order to understand what I am being asked to advise about, I look at the paragraph that says "relative loss is the loss that you would not have suffered had you been invested elsewhere." It is the difference between the loss that you do suffer and the loss, if any, that you would have suffered if you had been elsewhere. The reason why it comes into the Ombudsman's Report--and it is perfectly sensible and straightforward analysis by her--is because she recognised that at the time when the policy value cuts were being made in Equitable Life, there were policy value cuts being made elsewhere because of the way the markets were moving at that stage.

Q43 Charlie Elphicke: A lot of people say that your report is highly and excessively legalistic in its analysis rather than applying the maladministration/injustice concept that the Ombudsman employs in her report. What would you say to those people?

Sir John Chadwick: I would say first of all that the task I was being asked to undertake was quite a different task from the task that the Ombudsman was undertaking. I was being asked to advise the Government how you assess relative loss defined as it was in the report. If they ask me to do that I am bound to ask myself, "What does relative loss mean?" Years of conditioning will lead me to interpret the words that are written in the report rather than make up some concept for myself.

Q44 Mr Walker: Sir John, just going back to your appointment, had you had a relationship with the Treasury in the past before you were appointed to undertake this specific piece of work or were you recruited after open selection? How did the process of you coming on board manifest itself?

Sir John Chadwick: I was certainly not recruited after open selection, and I certainly didn't apply for the job. I was asked to do the job. How I got asked was a matter that this Committee explored in its second report. You will find in that report that what happened was that the Lord Chief Justice was asked to suggest somebody. He asked me whether I would be willing to do it. I said to him words to the effect, "I have a great failing of being unable to resist taking up poison chalices; this is one, but I won't turn it down." So my name went forward.

The second question: have I a previous relationship with the Treasury? I left the bar in 1991; in the previous 10 to 20 years as a barrister I probably would have been briefed by the Treasury once or twice in tax cases. I was not standing counsel for the Treasury. I was standing counsel for the Department of Trade during the 1970s for about six years.

Q45 Mr Walker: I suppose the concern I have, Sir John, is that we have the Ombudsman making her recommendations, and the Government, having charged her with looking at this and having accepted her report, suddenly realise, "My word, we could be liable for quite a lot of money here. We need to find someone who can reduce our exposure." Hey presto, Sir John Chadwick arrives, and I'm sure you were there for the best of reasons, but was it suggested to you before your inquiry that, really, the idea the Government could come up with four or four and a half billion in compensation was quite ridiculous, and what they really wanted you to do was find a way of reducing this figure quite significantly? Whether that was suggested in conversation, on a sofa, in a gentleman's club in Pall Mall, I don't know, but do you think you were picked because it was a fairly safe bet that Sir John Chadwick was going to make sure the Government's liability was significantly reduced?

Sir John Chadwick: First of all, I had no conversation with anybody either on a sofa or in a gentleman's club. I have only met ministers on three occasions, one Minister on each occasion, and on none of those occasions has anything like that been suggested to me. If it had been I should have refused to do the job.

Q46 Mr Walker: What about Permanent Secretaries, when you were talking around the brief?

Sir John Chadwick: No, I had a conversation with the Permanent Secretary on the telephone when he asked me if I would be willing to do it. At that stage I don't think the terms of reference had actually reached a written form and there was no suggestion at all of--and I would have regarded it as pretty scandalous if there had been--"We are putting you in as our man to get the figure down." I made a point during my work of not asking what the figure would be at the end. These figures in Towers Watson's letter are figures that broke to me when I first saw that letter; I hadn't seen those figures before, I didn't know what the figures were going to come out at. I knew from reading the Ombudsman's Report that Equitable Members Action Group had suggested to her a figure of about £4 billion, so that figure was around because it appears in the Ombudsman's Report. She neither endorses it nor otherwise in the report, and couldn't have done in the report, because she wouldn't have done the work that would enable her to do so. Had the Treasury been looking for a Treasury stooge, I don't think there is anything in my background that would have suggested I was the obvious choice. I have certainly decided cases against the Government at least as often as I have decided cases in favour of the Government.

Q47 Mr Walker: Very last question. I don't think £4 billion is going to be produced by any government. Now that you are not working for the Treasury, or on behalf of the Treasury, what ballpark figure do you think would be the right amount to balance the interests of policyholders with the interests of the taxpayer, and also demonstrate that justice has been served? I don't think we should use the word "fair", but that justice has been served.

Sir John Chadwick: Well there are two limbs to answering that question. The first is, what would be a fair or just figure if there were no other financial constraints? That is, if we not going through a period where there are very severe cuts likely to be made. The second is, what figure is the Government likely to come up with against the background that it is cutting or likely to cut all over the place? The second figure is something that really I cannot speculate about; I just don't know what other pressures there are on the Government. All I could do would be to say to you what I think would be a fair or just figure if there were no other constraints of an austerity nature. The figure which Towers Watson came up with on the basis of the advice I gave is £400 million to 500 million. Now that seems to me to represent a fair sharing of the burden between taxpayer and policyholder, but it depends, of course, on the basis on which the Government wants to compensate policyholders. A very crucial question is whether compensation is to be paid on the basis that every policyholder would have decided not to invest in Equitable Life, or whether it is to be paid on the basis that those to be compensated are those who would in fact have decided not to invest in Equitable Life. The great problem is that you could not in practice find out who the latter parties were individually; it would be an enormous exercise to interview 1.5 million policyholders and ask them what they would have done 15 years ago if they had known that the figures in the regulatory returns ought to have been different.

Q48 Chair: Do we know what they would say now?

Sir John Chadwick: What they would probably say now is, of course, "I wouldn't have touched it." But I suspect that if pressed many would say, "I had no idea what a regulatory return was, never saw it, never went near it." If you ask people now, of course they will say, "I wouldn't have touched it," but that is part of the problem; that is why you could hardly conduct the exercise in a sensible way. What I tried to do was to ask the question: looking at the effect which bad news had on the premium income stream into Equitable Life, by what proportion would you have expected it to go down? That is a measure of how many people could have been expected to make different decisions, and so is a measure of the burden that you should throw on the taxpayer. You have then got to find some way of sharing out the money that is available among the policyholders.

Chair: Mr Halfon, then Mr Flynn, and then we must ask about the terms of reference.

Robert Halfon: I was going to just ask a little to do with the terms of reference. Shall I wait till that--?

Chair: Can you wait?

Q49 Paul Flynn: It is just a brief one. Most of my constituents want to know when they are going to get paid and how much they are going to get paid. One of the things that baffles them is how you came to this figure of 20% to 25% of relative loss. Why that? They ask, not unreasonably, why not 100% of relative loss?

Sir John Chadwick: The answer to that is quite simple. If a policyholder could demonstrate that he would have made a different investment decision if he had known the position as it should have been revealed in the regulatory returns, he should get 100%. If he could not demonstrate that, he should not get anything. Because you cannot identify which policyholders would be able to demonstrate that and which would not, you have to find some way of sharing the burden between what the taxpayer can fairly be asked to pay and what the policyholder should get. The figure of 20% to 25% represents my assessment of the proportion of policyholders who could have been expected to make different investment decisions. So you are just sharing it across the board.

Q50 Paul Flynn: What you are suggesting is that it wouldn't be right for the mass of taxpayers, not clients of Equitable Life, to provide an insurance scheme for the bad investment decisions or incompetence of Equitable Life.

Sir John Chadwick: Ultimately it is for the Government to decide that, but it seems to me a step too far.

Q51 Paul Flynn: Just finally one brief one. When you were given your task, was any indication given to you about how long you were expected to take before you reported?

Sir John Chadwick: Yes, it was always contemplated that my work would take between 12 and 18 months, and in fact it took 18.

Q52 Kevin Brennan: Might one say that, on average, the 1.5 million would be about £350 each under your recommendation, or have I got that wrong?

Sir John Chadwick: No, I think that's over-simplistic. There are two reasons why. First of all those with larger sums invested could be expected to get more than those with smaller sums invested, unless in the process of distributing one imposed some cap on the amount that was going to be paid. Secondly, the effect of bringing in what I have described in my advice as "internal relative loss" is to alter the balance between some policyholders and others so that some will get more than they would get if you had a simple pro rata distribution and some will get less.

If I could just explain for a moment what that concept is. Had Equitable Life been regulated without maladministration, you could have expected it to be in a stronger position in 2000 than it was. The reason is that it would have distributed less during the '90s than it did, and so it would have had more money than it did. So the policy value cuts could be expected to have been less than they were. One way of measuring loss would be to ask: what is the difference between the policy value cut that was made and the policy value cut that would have had to be made if Equitable Life had been regulated properly? That is the concept I have described as internal relative loss.

Q53 Kevin Brennan: But £400 to £500 million divided by 1.5 million is £350.

Sir John Chadwick: I haven't done the sum, but I'm sure you're right. If you divide 400 by 1.5, is that the figure you get?

Q54 Nick de Bois: Sir John, thank you. Do you not sense though or think that there is an element of rough justice in the process you have outlined? For example, the 20% to 25% is assuming that one in four were making a good decision and three were not. That in itself is an element of rough justice. If you do accept that, is it simply because you want to bring some finality to the matter as quickly possible?

Sir John Chadwick: I do accept that it produces an element of rough justice because it has the effect that some people get paid when they should not get paid and other people don't get paid as much as they should get paid. It produces that because the practical difficulties of determining which policyholders would have made different decisions are so immense that it would take such an enormous length of time and that it is not a sensible road to go down. It is also not a sensible road to go down because even if you tried to do that you would end up with an element of rough justice in the sense that those relatively few policyholders who had kept all the correspondence that had ever been sent to them by brokers, advisers and Equitable Life in a proper chronological order, and could show the steps in their thinking, would do much better in the forensic process of establishing what they would do than the large bulk of policyholders who live their lives, like most of us, in a state of relative chaos and would not have any of that material. Those policyholders would simply be coming before whatever the relevant tribunal was and saying, "If I had known what I ought to have known, I would have made a different decision," to which I am afraid the answer is likely to have been, "Well you would say that wouldn't you." How do you tell? It would be a very difficult exercise to carry out, and you would not end up with anything approaching perfect justice.

Q55 Chair: I am sorry, we are going to have to press on. We are running out of time and we have got a lot to get through. Paragraph 7.6.6 of your advice, you say that the Ombudsman reached different answers because you were addressing different questions. What would have happened if you had been addressing the same questions as the Ombudsman? Would you have reached a similar outcome?

Sir John Chadwick: It's impossible to say, because that work wasn't done.

Q56 Chair: With respect, with a government that now says they want to implement the Ombudsman's recommendations, is that not the question you should now be asked to do?

Sir John Chadwick: Well I haven't been asked to do that.

Q57 Chair: No, but looking at what is in the manifestos of both coalition parties, what is in the coalition agreement, the motions that have been passed through Parliament, if we were to implement the Ombudsman's recommendations, doesn't the Government need to revise your remit and ask you to revise your work? I appreciate I am asking you well outside the remit of what the Government asked you to do.

Sir John Chadwick: I am not suggesting that they should be encouraged to ask me to do anything more. You are plainly correct, logically. A possible time to do that would have been in May before I had completed my work, but my terms of reference were not revised. There are two ways in which they could be revised. First of all, I or anyone else doing the task could be asked to do the work on the basis that all the Ombudsman's findings of maladministration were accepted. I don't know whether the Government does accept all the Ombudsman's findings of maladministration. Some of the Government's decisions were not challenged in the judicial review, and of those challenged, at least one was upheld. I don't know what the Government's position is on that; my terms of reference didn't change. If I were doing my task accepting all the findings of maladministration, I would be asking the actuaries to be doing a different exercise from the one that they actually did do and they might come up with different figures.

Q58 Chair: How constitutionally appropriate do you think it is that either the last Government, or indeed by implication this Government, basically asked you to complete work that is inconsistent with the Ombudsman's Report.

Sir John Chadwick: Constitutionally, I regard it as acceptable for reasons which I set out in a judgment I delivered in the Court of Appeal about three years ago in the case R (Bradley) v. Secretary of State for Work and Pensions, where very much the same point arose. The view that I took then--and it is the view that was followed by the Administrative Court in the present case, and is probably at least received wisdom until the Supreme Court reaches a different conclusion--is that the Government ought to accept the Ombudsman's findings of fact unless there are cogent--meaning strong, compelling—reasons for differing.

Q59 Chair: Your terms of reference were actually adjusted to reflect that judgment, is that correct?

Sir John Chadwick: No, my terms of reference followed what the Government had done in the light of its understanding of that judgment. The Administrative Court then told it that it had misunderstood the judgment, and my terms of reference were revised. Just to complete the answer, my final terms of reference, as they emerged in November, reflected the principle that I have indicated.

Q60 Greg Mulholland: Good morning, Sir John. I just want to ask: you said that any payment from public funds to fulfil disappointed expectation of gain rather than to redress loss, and I quote, Sir John, "would require strong justification". Do you not believe that there is strong justification to go down that route, and if not, is that because you are following usual legal practices and really it is a legal decision as opposed to the decision made by the Ombudsman? Is that your justification?

Sir John Chadwick: In terms of the context in which that remark was made, I was starting from the position that to compensate people for disappointed gains would be a very unusual step to take for anybody approaching this with a legal background. It is easy to understand why people should be compensated for losses that they did suffer. Less easy to understand, and less easy I think for the public to understand, is why people should be compensated for gains they didn't make. We would all like to be compensated for the investment we didn't make as well as being compensated for the loss we made in the one we did make. That, to my mind, is such a radical departure from the norm that I would have expected to find it spelt out very clearly so that the Government could decide whether it wanted to go down that route. It is not at all obvious to me that that is a route the Government would want to go down. It is a decision it needs to make, and therefore if that was what was being suggested, I would have expected it to be suggested very clearly.

Q61 Greg Mulholland: Finally, Nick used the phrase "rough justice". Do you genuinely think it is fair--and of course there is fairness to the taxpayer and fairness to policyholders--to cap external relative losses at the level of absolute losses as you did in your report? Do you think that is genuinely fair?

Sir John Chadwick: There are two points. First, whether I think it is fair to cap loss by reference to loss actually suffered rather than by reference to gain not made. The answer to that is: yes I do. But it would not matter whether I did or not because what I was seeking to do was to interpret my terms of reference. If you ask me whether I think that is a sensible approach, the answer is yes.

The second limb of the question, which is where the 25% comes in, is how you deal with the problem where you cannot identify those who would have made a different decision when you can be reasonably confident that not everybody would have done so. What do you do in that situation? Do you throw the whole burden on the taxpayer by assuming that everybody would have made a different decision, although you think that is very unlikely? Or do you take a pragmatic approach and say, "This is the amount the taxpayer ought to bear; now, how are we going to distribute it among those who have suffered loss?" The only basis for distribution that I can come up with is the obvious pro rata basis that I have suggested in the reply.

There may be other bases that I have not thought of. It would be a political decision, but you could, for example, say we will compensate all of those who have lost less than £10,000 and we won't compensate those who have lost more—but that wasn't what I was being asked to advise about.

Q62 Greg Mulholland: So you think potentially different terms of reference could have come up with a different definition of fairness, as of course the Ombudsman did?

Sir John Chadwick: The Ombudsman's scheme proceeded on the basis that those who suffered injustice would be compensated and they would have suffered injustice if they could show they relied on the regulatory returns up until 1998-99. That was her scheme. That is what she says in her report.

Q63 Greg Mulholland: The Ombudsman is shaking her head there with--

Sir John Chadwick: I know she doesn't agree with that now, but I could only advise on what was in the report, not on the basis of subsequent correspondence. The reason why I take the view I do is in the report.

Chair: Sir John, we have two further very brief questions. You have been extremely informative.

Q64 Mr Walker: Just taking your figure, Sir John, of £300 million to £400 million as being, in your view, perhaps reasonable, before the Government decides what it can afford. How many policyholders do you think are eligible for some form of compensation who are still left alive?

Sir John Chadwick: They are eligible for compensation whether they are alive or dead.

Q65 Mr Walker: How many are? That is probably more use.

Sir John Chadwick: I think there are about 1.5 million.

Q66 Mr Walker: £300 million divided by 1.5 million becomes about £300 a head.

Sir John Chadwick: We have been there; it is not very much.

Q67 Mr Walker: It does seem then that this whole process of the past decade has probably been a waste of money, wouldn't it seem to you? We have had 10 years of investigation, 10 years of enormous cost and time--government time, everybody's time--to come up with these figures. In your view, would you basically say that perhaps this would have been better not entered into in the first place?

Sir John Chadwick: If you want my view, and this is not something I have advised about, a sensible way of dealing with this sort of problem would have been to say 10 years ago, "Let's devote £500 million to it and share it out among everybody." That with hindsight would have been a sensible way of dealing with it, but that isn't where I started.

Q68 Robert Halfon: The terms of reference which the Government set you, were you happy with those or did you feel that you should have been set different terms of reference?

Sir John Chadwick: I was asked if I wanted to suggest any textual amendments and I suggested one, which was accepted. I had not been sufficiently immersed in the problem to define my own terms of reference. That is to say, had I been starting from the position I now know, I might well have suggested different terms of reference, but I didn't know that 18 months ago plus. I did make one suggestion, and it was adopted.

Q69 Robert Halfon: Would the conclusion have been different if you had had different terms of reference as you set out?

Sir John Chadwick: Well it depends on what they were. In principle, the conclusion follows the terms of reference. So if you change the terms of reference you must expect that you may get a different conclusion. How different depends on how much change you make.

Q70 Chair: You mentioned a little while ago that if your terms of reference had been in line with the Ombudsman's Report you don't really know what conclusion you might have come to, but you would have come to different conclusions. Were the Government now to ask you to do some supplementary work assuming terms of reference that the Ombudsman would accept, how long would it take you to add to your work in order to adjust your conclusions? Is it something that you could do quite swiftly?

Sir John Chadwick: It wouldn't take very long to identify what I needed to ask Towers Watson. The figures are actuary-dependent; I cannot work out the figures. I don't know how long it would take them to work out the figures.

Q71 Chair: Is it something you could do in a week, or would it take months?

Sir John Chadwick: On past experience I should think it would take months. These are very complicated matters. The complication is in determining what the response of Equitable Life would have been if concerns had been raised which were not raised.

Q72 Chair: Given that delivering the scheme is likely to take months anyway, given that the Ombudsman has made it clear and you have made it clear that your terms of reference are not compatible with her findings and the Government have said they want to implement her findings, is there an alternative?

Sir John Chadwick: I haven't seen any public statement that suggests that the Government is going to accept findings of maladministration, which have hitherto been rejected. I am well aware of the statements in the coalition manifesto, but that doesn't seem to me to point directly either way. The minister can tell you what they are going to do.

Chair: Sir John, you have been extremely helpful, that would seem a good moment to ask you to vacate your chair for the minister. Thank you very much indeed.

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