Insurance Post

Little hope on Equitable Life front

The debate on Equitable Life in Westminster Hall yesterday offered precious little hope of a speedy or satisfactory resolution to the problems caused by the collapse of the mutual insurer. It must make thoroughly depressing reading for the one million policyholders left waiting for compensation after almost nine years.
Despite some measured, reasoned contributions from Conservative, Labour and Liberal Democrat MPs the minister put up to answer the debate, Ian Pearson, the Economic Secretary to the Treasury, simply stonewalled. I won't go over all the issues here as they have been covered adequately in previous posts. There are two that are worthy of further comment, however.
The first is the snail's pace progress being made by Sir John Chadwick, the high court judge given the unenviable task of serving up another report for the government to ignore. This is what the minister had to say about the work he has done since being appointed in January.

"First, Sir John has obtained, read and analysed the extensive material relevant to the ombudsman's findings relating to maladministration resulting in injustice, which
the Government accepted in our response to her report. Secondly, he has established an office to manage the work that will be required, appointed the key members of his team and secured accommodation for them. Thirdly, he has met and corresponded with representatives of Equitable Life and obtained documents from that source, including specimen policy documents.

Fourthly, Sir John has responded to an offer of assistance from the parliamentary ombudsman by requesting certain background material to which her report refers. Fifthly, he has replied to correspondence from numerous policyholders and former policyholders. Sixthly, he has interviewed applicants for appointment as actuarial adviser so that his office will have the expert technical support needed. The proposed appointment involves a number of commercial and technical issues that the Treasury is now addressing with its legal advisers. It is hoped that an actuarial adviser can be appointed shortly. Sir John expects to establish a website through which interested parties can keep informed of his work as it progresses and make representations to his office."

Why, oh why wasn't this job given to the Financial Services Compensation Scheme? It has an office, it has staff, it has actuarial experts and it has a website. It also has a track record of moving quickly to deal with unexpected problems that, strictly, fall outside of its terms of reference. Its speedy response to being tasked with sorting out the compensation for people caught by the failure of the Icelandic banks was, for instance, recently praised by the Treasury Select Committee. It was prepared to take on a similar task for Equitable Life. Why wasn't it asked? Simply because it would have meant the Treasury having to put a figure on the sum it was prepared to set aside for compensation. It can't go on ducking this for ever.

The second point that comes out of this debate is a constitutional one that touches on the current crisis over MPs' expenses. Several members who spoke during the debate highlighted the constitutional position of the Parliamentary Ombudsman. It is her reports on Equitable Life that the government keeps ignoring and dismissing. The Ombudsman was set up the scrutinise the work of government and Parliament, specifically to deal with complaints from the public. It is independent and it therefore holds the government and its departments to account on behalf of the public. Almost as Mr Pearson was dismissing the latest Ombudsman's report on Equitable Life the Prime Minister was on his feet at a Downing Street press conference announcing yet another body to offer independent oversight of Parliament - this time specifically of MPs, their pay and expenses. How can anyone have confidence in that if the government keeps ignoring the organisations already meant to be holding it to account?

Sadly, there does not seem to be any resolution to the Equitable Life crisis in sight. If the estimates of another two and a half years before any payments are made are anywhere near right and it is the case that 15 policyholders die every day, then we are looking at nearly 14,000 more people who will die without ever having had their claim for compensation even considered. Where is the justice in that?

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