Equitable Life victims 'have been let down by government'

Published on Tuesday 5 May 2009 21:12

THE government was today facing criticism from the Parliamentary Ombudsman for its failure to compensate policyholders of Equitable Life.

In a special report, Ann Abraham said she was "deeply disappointed" by the government's response to her earlier report on its regulation of the society and its refusal to set up an independent tribunal to calculate redress for policyholders.

As a result, she said she had produced the report, "Injustice unremedied: the Government's response on Equitable Life", to draw the matter to the attention of parliament.

Ms Abraham said: "The government's response to my report was deeply disappointing.

"It provided insufficient support for the rejection of my findings of maladministration and injustice. It also begged a rather larger question as to what the purpose of regulation was supposed to be."

Ms Abraham had called on the government to apologise to policyholders and set up an independent tribunal to calculate compensation for them, after finding ten instances of maladministration by regulators and Whitehall officials in the period leading up to December 2001.

But the government rejected all or part of five of her findings of maladministration. Instead of following her compensation recommendations, it has appointed former Appeal Court judge Sir John Chadwick to advise it on making ex-gratia payments to policyholders who had been "disproportionately affected".

Ms Abraham said: "It is clear not everyone who has suffered injustice will be eligible for a payment and that not all of the injustice suffered will be put right. The injustice I identified in my report will not therefore be remedied as a result of the government's response."

Equitable Life was brought to its knees in 2000 when it lost a legal battle in the House of Lords over the rights of its policyholders, forcing it to close to new business. Worth 26 billion in its prime, it now has around 200,000 with-profits policyholders and a 5.95 billion with-profits fund.