3 Conclusion |
47. We hope that this long and drawn out process
will soon be coming to a conclusion, policyholders have waited
long enough for justice. We strongly welcome the Financial Secretary's
explicit acceptance of the Ombudsman's recommendation. This leads
us to the conclusion that the Government cannot base its judgement
on the level of compensation owed on the Chadwick approach. The
Government had the opportunity to salvage this by amending the
terms of reference in May, but failed to do so.
48. We have therefore recommended that the Government
re-engages Sir John Chadwick to establish what conclusions he
would reach under terms of reference which reflect all ten of
the Ombudsman's findings. We believe this work can be done in
parallel with the Independent Commission's work to design a compensation
scheme. We think it is unlikely that this will delay payment to
policyholders, but we acknowledge that it would leave open the
question of the Government's liability in the spending review.
Alternatively the Government must find some other way of resolving
the incompatibility between the Ombudsman's findings and Sir John
Chadwick's existing terms of reference. If the Government's proposals
remain based on Sir John's existing terms of reference we concur
with the Ombudsman that they are, in principle, an "unsafe
and unsound" basis on which to proceed.
49. However, should it announce the sum available
for compensation as part of Spending Review it must specify how
it has adjusted the final loss figure to account of the need to
balance fairness to the taxpayer and affordability. Only in this
way will the Government meet its commitment to implement the Ombudsman's
findings in full.