Compensation call for Equitable Life victims
4 Aug 08
Ministers should set up a compensation fund for policyholders in Equitable Life, Ann Abraham, the Parliamentary Ombudsman says
Ministers should set up a compensation fund for policyholders in Equitable Life, Ann Abraham, the Parliamentary Ombudsman says. The life insurance company came close to collapse in 2000 after being ordered by the High Court to fulfil financial promises which it could not afford.
More than a million policy-holders were left with reduced retirement savings.
Abraham said the Government should apologise for a "decade of regulatory failure" and identified 10 instances of maladministration by its departments.
She said that regulators failed to use powers available to them to protect the interests of the Equitable's policyholders.
"I have alerted Parliament to the injustice which I have found in this case resulted from serial maladministration on the part of the former Department of Trade and Industry, the Government Actuary's Department and the Financial Services Authority," Abraham said.
The Ombudsman does not say how many people might be eligible for compensation, or how much they should get.
Current Equitable chairman Vanni Treves said her conclusions were damning. "We could not really have asked for more. Her reasoning and recommendations are beyond argument."
The Treasury said: "We expect to provide a full response to the House in the autumn."
The Ombudsman says that in the run-up to the Equitable's financial crisis, regulators allowed it to dress up its finances to the tune of £2.7 billion.
Then, "on an unsound basis", they allowed it to stay open for business even though it was in a "dire financial position".