Equitable Life - Public Administration Committee Contents

1 Introduction

1. The search for compensation for Equitable Life members has been heavy on inquiries but light on solutions. We welcome the Government's commitment to resolving matters speedily. It is no less than those involved deserve.

2. We have had a long-standing interest in the prudential regulation of Equitable Life. This stems from our responsibility for reviewing special reports from the Parliamentary and Health Service Ombudsman to Parliament. The Ombudsman published her report, Equitable Life, 'A Decade of Regulatory Failure', in July 2008, which made ten findings of maladministration.[1]

3. Our predecessor committee undertook two inquiries. The first, 'Justice delayed: The Ombudsman's report on Equitable Life', was published before the Government had responded to the Ombudsman.[2] The second, 'Justice denied?' which dealt with the Government's response to the Ombudsman's recommendations.[3]

4. The Government accepted only some of the Ombudsman's ten findings of maladministration. It announced that it would establish an ex-gratia payment scheme and commissioned Sir John Chadwick to advise independently on the extent of relative losses suffered by Equitable Life policyholders. His remit was based on this partial acceptance of the Ombudsman's findings.

5. There has since been a change of government. The Coalition's Programme for Government commits it to implementing the Ombudsman's recommendation "to make fair and transparent payments to Equitable Life policyholders for their relative loss as a consequence of regulatory failure".[4] In July, the Financial Secretary published Sir John's advice which has proved controversial because it proposes that policyholders should receive around 20-25% of their relative losses.

  1. This report is inevitably short and intended to inform discussion before the Government announces the total compensation figure as part of the Spending Review. Therefore it does not consider Sir John's advice or Towers Watson's supporting actuarial advice in detail. It does, however, make observations about the political commitments given by this Government and by Members of this House, and whether the process followed by government is based upon safe and sound principles. It draws on the written evidence we have received from our witnesses, as well as EMAG and Equitable Life. It also reflects the oral evidence we heard.

1   Parliamentary Ombudsman, Fourth Report of Session 2007-08, HC 815 Back

2   Public Administration Select Committee, Justice delayed: The Ombudsman's report on Equitable Life, Second Report of Session 2008-09,HC 41 Back

3   Public Administration Select Committee, Justice denied? The Government's response to the Ombudsman's report on Equitable Life, Sixth Report of Session 2008-09,HC 219 Back

4   Cabinet Office, The Coalition: our programme for government, May 2010 Back

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