Ombudsman criticises Government's response to Equitable Life report

30 January 2009 / by Rachael Stiles
The Parliamentary Ombudsman Ann Abraham, has criticised the Government for its response to her report on its handling of the Equitable Life debacle.

The Government's disappointing response is prompting the Public Administration Select Committee (PASC) to re-open its enquiry into the life insurance and pension provider's collapse, which has left one million policyholders still waiting for compensation.

Published in July 2008, the Ombudsman found in her report that the Government was guilty of maladministration, which contributed to the failure of Equitable Life in 2000, and had to wait more than six months for a Government response to the findings.

Despite urging in the report that it was "imperative that the Government respects her conclusions", Ms Abraham expressed disappointment that "the Government has thought fit to reject findings made by the Ombudsman after a lengthy, detailed, complex, and rigorous investigation."

She also said in the memorandum that the she would be "deeply concerned if the Government chose to act as judge on its own behalf by refusing to accept that maladministration took place. This would undermine the ability to learn lessons from the Equitable Life affair."

Of the ten findings of maladministration and five instances of injustice which the report found, the Government agreed with only four, and Ms Abraham said that if the Government cannot accept its own shortcomings, then this "raises questions about whether citizens can rely on the implementation of independent adjudications of their complaints."

Not only does the Government reject many of the Parliamentary Ombudsman's findings, she said, but it also offers insufficient reasoning for why the findings were rejected, which "begs the question as to what the purpose of regulation was supposed to be" if the Government disregards the results of the investigation.

While the Government has agreed to apologise to Equitable Life's customers and to set up a compensation scheme, as recommended by the Ombudsman, its response to the report indicates that the injustices it unearthed "will not in every case be remedied - nor in any case will it be remedied fully." Ms Abraham said.

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