PARLIAMENTARY Ombudsman Ann Abraham revealed yesterday she is reopening her investigation in to the conduct of government departments responsible for regulating the troubled mutual Equitable Life.
The announcement represents Equitable’s 2,000 policyholders’ best chance of getting compensation, after the mutual decided not to pursue the government itself.
Abraham’s decision to open another investigation into the scandal that befell Equitable could result in the government having to offer redress if she finds evidence of maladministration.
Colin Slater, chairman of Equitable Members’ Action Group, which has been campaigning for compensation for the loss of substantial chunks of members’ pensions, said: "This is excellent news, a triumph for common sense."
Abraham investigated the regulation of Equitable by the Financial Services Authority between 1 January, 1999 and 8 December, 2001 but found no evidence of maladministration. However, she has come under increasing pressure to reopen her inquiry, going further back to look at the role played by the Treasury and Department of Trade and Industry when they regulated the society.
Equitable was plunged into difficulties after losing a House of Lords ruling over the rights of its guaranteed annuity rate policyholders, leaving it with a 1.5 billion liability and forcing it to close to new business and slash the value of members’ policies.
Although a previous investigation into what went wrong at the mutual, carried out by Scottish judge Lord Penrose, concluded that while the regulatory system had failed policyholders, the society was the "author of its own misfortunes", Abraham said yesterday: "The concerns surrounding the regulation of Equitable Life remain despite the Penrose Report and the government’s response to it.
"I took the view that I should consider whether a new investigation by my office was justified as Lord Penrose did not deal with questions of maladministration or redress."
A Treasury spokesman said: "The Ombudsman is entirely independent of government and the decision is a matter for her. The Treasury will co-operate fully with the investigation."