Watchdog attacks Equitable Life plans

Published on Monday 26 July 2010 15:37

NEW proposals for compensating victims of the Equitable Life scandal have been rejected as "unsafe and unsound" by the parliamentary ombudsman.

Ann Abraham yesterday warned MPs that the compensation plan set out by Sir John Chadwick last Thursday would fail to deliver a fair or transparent outcome for policyholders.

In a report commissioned by the previous government and set to form the basis of the current government's compensation plan, Chadwick recommended a total payout of 475 million to 650m, well short of the 1 billion that campaigners had expected.

Consequently more than a million policyholders who lost money after the near collapse of Equitable a decade ago can expect compensation of less than 500 each when payouts begin next year.

But, in a letter sent to MPs yesterday, Abraham said: "I thought it important to let members know as soon as possible that the Chadwick proposals seem to me to be an unsafe and unsound basis on which to proceed."

She accused Chadwick of misinterpreting the conclusions of her July 2008 report into the regulatory failures that contributed to Equitable's downfall. "I find these flaws particularly concerning, providing as they do the basis for some of the central and more controversial proposals within the Chadwick report," she said.

Chadwick's report has also come under fire from Chris Wiscarson, chief executive of Equitable Life, who said he could not support conclusions apparently at odds with the expectations of the parliamentary ombudsman.