Government rebuked over Equitable Life failings
The government has been reprimanded by the parliamentary ombudsman for failing to act on its recommendations to compensate Equitable Life victims.
Ann Abraham, the parliamentary ombudsman, has published a new report, entitled Injustice Unremedied, which heavily criticises the government for rejecting many of her recommendations over the handling of the collapsed insurer.
“I was deeply disappointed that the government chose to reject many of the findings that I had made, when I was acting independently on behalf of Parliament and after a detailed and exhaustive investigation,” she writes in the report.
Abraham states that she is “entirely unpersuaded” by the government’s argument as to why it has rejected her recommendations. The lawfulness of the government’s response is now “a matter for the courts” she adds.
Equitable Life got into trouble after it promised guaranteed pension income to customers based on interest rates in the 1970s and 1980s. However, during the 1990s when interest rates fell and inflation rose, the insurer found it was unable to honour policies, leaving more than a million customers high and dry.
It finally collapsed in 2000, and has been subject to several investigations ever since. In 2004, Lord Penrose concluded his review and blamed the management for the disaster. However, as the firm ultimately went bust, no compensation has ever been paid out.
In July 2008, Abraham published her report into the issue with the recommendation that the government apologises to Equitable Life policyholders and establishes a compensation fund for them.
However, with little action on the part of the government since then, the ombudsman has used its powers to publish another report highlighting the “injustice unremedied” – a power it has only utilised five times in 42 years.
Vince Cable, the Liberal Democrat shadow chancellor, accuses the government of ducking its responsibilities over Equitable Life policyholders.
"The ombudsman found evidence of both maladministration and injustice in the government's regulation of Equitable Life, findings which ministers rejected without basis,” he says. “30,000 people have already died waiting for a just resolution to the Equitable Life saga. Policyholders should not have to wait any longer.”
Cable is now calling for a further ombudsman report into Equitable Life: "The government must accept the recommendations of the ombudsman on compensating those who have suffered loss."
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.