Equitable Life - Public Administration Committee Contents

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.

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