Annex C - Text of letter to Douglas Alexander MP, Minister for the Cabinet Office (19 July 2004)
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Equitable Life - the Government Actuary's Department and the Parliamentary Ombudsman's jurisdiction
As you will know, I have recently been consulting key interested parties in order to inform my decision as to whether, in the light of the Penrose report, I should conduct a further investigation into the prudential regulation of the Equitable Life Assurance Society.
That consultation exercise is now complete and I enclose a copy of the report setting out my decision - and the reasons for that decision - which I will lay before Parliament on 19 July 2004. You will see from paragraphs 19 and 20 that I have decided, subject to the addition of the Government Actuary's Department (GAD) to the list of bodies within my jurisdiction, to conduct a further investigation of the prudential regulation of Equitable Life, focusing on events relevant to the closure of Equitable Life to new business.
The administrative actions of GAD are not currently within my jurisdiction, as GAD is not listed in Schedule 2 to the Parliamentary Commissioner Act 1967.
However, there is a considerable degree of material in the Penrose report which suggests that the role of GAD was important to the prudential regulation of Equitable Life. I refer to some references in the Penrose report to the role of GAD in paragraphs 29 and 48 of my report. Other criticisms of GAD are set out in paragraph 49.
In the light of that, and based on my experience of the investigation I have already conducted, I am sympathetic to the view put to me that any further investigation by me would be meaningless without jurisdiction to investigate the actions of GAD
You will know that the Financial Secretary to the Treasury has signalled the Government's willingness to consider any request from me for the addition of GAD to my jurisdiction. This letter is my formal request that the Government take the action necessary for this addition, and that it does so as soon as possible.
I recognise that, since April 2001, the responsibilities of GAD in relation to the regulation of life insurance companies have been transferred elsewhere. In the circumstances, if it were felt that it would be inappropriate for GAD to be within my jurisdiction in relation to its current responsibilities, then I would suggest that the relevant entry to Schedule 2 of the 1967 Act might be accompanied by a Note. This Note could limit my powers to GAD's actions prior to the date at which the Financial Services Authority assumed GAD's relevant functions.
I hope that the Government will feel able to agree to this request. I am happy to discuss this further if that would be helpful.
I am sending a copy of this letter to Ruth Kelly and to the Government Actuary. You will see also that the text of this letter is reproduced as an annex to my report.
