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Ann Abraham,
the Parliamentary Ombudsman, has called on the Government to apologise
to Equitable Life policyholders and to establish and fund a compensation
scheme.
Abraham’s report, Equitable Life: a decade of regulatory
failure (HC 815), makes ten determinations of maladministration
on the part of the former Department of Trade and Industry, the
Government Actuary’s Department and the Financial Services
Authority (FSA) in relation to their regulation of Equitable Life
in the period before 1 December 2001.
Abraham has upheld several specific complaints and a general complaint
about the period before Equitable Life closed for business on 8
December 2000 stating that the public bodies responsible for the
prudential regulation of insurance companies failed to properly
exercise their regulatory functions in respect of Equitable Life.
Due to findings that the injustice resulted from maladministration,
Abraham has recommended that a compensation scheme be established
to assess the individual cases of Equitable Life’s current
and former policyholders, with a view to paying compensation to
remedy any financial losses which would not have been suffered had
they invested elsewhere. The scheme should be implemented within
six months of any Governmental decision, and should complete its
work within two years.
The Ombudsman has also encouraged that the Government apologise
to policyholders for the ‘serial regulatory failure’
she has identified in her report.
“The failings I have identified in this case were not failures
of the system of regulation that was in place at the relevant time.
The aim of that system was the protection of the interests and reasonable
expectations of policyholders and potential policyholders. Parliament
gave those operating that system robust and wide-ranging powers,
which the regulators were under a duty to consider using where appropriate,”
Abraham said.
“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. I recognise that
my recommendations raise questions which are now properly ones for
Parliament and Government together to consider. I stand willing
to assist in their consideration of the issues raised by my report
and of the recommendations which I have made,” she added.
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Pensions Age July 2008
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