So, autumn really has turned to winter for Equitable Life policyholders as any hopes they had that 2008 might see the final pages of the saga of their quest for compensation turned were dashed. The government has reneged on its commitment to respond during the autumn to the Parliamentary Ombudsman’s report and its damming findings of maladministration on the government’s part.
It has used as its excuse the subsequent investigation of the Public Administration Select Committee which published its report on Monday and wholly backed the Ombudsman’s stance. The PASC may have added weight to the calls for compensation and an apology but it hardly added any new thinking so it is difficult to see how it can be used as an excuse by the government to delay any further. There seem to be two plausible explanations for deferring a response until after Parliament returns on 12 January
The first is that it is going to respond with a rejection of the Ombudsman’s report and that it felt it couldn’t do this until the PASC had reported and then not with undue haste once it had the select committee verdict. It has to at least give the appearance of taking the PASC into account and an announcement this week might have been judged unduly hasty.
The second explanation is that the Treasury will offer some compensation but that it wants to nail down the mechanism for distributing it first. There is huge potential for extended arguments over how individual amounts will be calculated and how this will be overseen. The Treasury will be very aware of the pitfalls that await if it doesn’t get the distribution method sorted out, having seen ambulance chasing lawyers stealing money from miners, compensation scheme. It will want to close off the scope for claimant lawyers to get involved as much as possible.
This brings us back to the possibility that the Financial Services Compensation Scheme could have a role to play. It would certainly deal with the first problem by bypassing the need to set up a one-off compensation authority. It might not entirely head off the claimant lawyers but the FSCS does have considerable experience of dealing with them and of creating claims systems that limit the need fro people to seek legal advice and thereby forgo some of the compensation.
Even though to most observers it does look rather boxed in it is almost impossible to call which way the Treasury will go on this. In the current financial climate an outright rejection is by no means beyond the range of possibilities.
- City Minister on why the government is supporting insurance as the engine of the economy
- Ombudsman launches review following undercover investigation
- XL Catlin adds Brexit continuity clause to policies
- Broker Network makes fifth ‘powerhouse’ acquisition
- Munich Re to cut 900 jobs as reinsurer targets profits surge in 2018
- Aviva hires LV and Zurich bosses in commercial growth plan
- Axa denies U-turn after customer has excess refunded from Liverpool car park fire