The complaints that were made and the Government's initial response
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The general and specific complaints
3.1 My investigation – undertaken after wide consultation with those affected – began in July 2004. It was conducted in accordance with the provisions of the Parliamentary Commissioner Act 1967.
3.2 I have received 898 complaints referred by MPs in respect of 1,008 people. I also received 1,309 direct representations from a further 1,480 individuals.
3.3 With the help of the various action groups representing complainants, fifteen people were selected to act as lead complainants. Those people epitomise the position of all the principal groups of current and former policyholders and annuitants who had complained to me. The lead complainants authorised members of the action groups to act as their personal representatives during the course of the investigation.
3.4 The general complaint made was that:
… the public bodies responsible for the prudential regulation of insurance companies… and the Government Actuary’s Department failed for considerably longer than a decade properly to exercise their regulatory functions in respect of the Equitable Life Assurance Society and were therefore guilty of maladministration.
3.5 Eighteen detailed complaints were made. Those heads of complaint were labelled complaint A to complaint R and are set out in full in Annex A of this document. Those detailed complaints, together with the general complaint, formed the basis for my investigation.
3.6 All the complainants claimed that they had suffered financial and other injustice as a result of alleged maladministration by the prudential regulators and sought full redress for that injustice.
The Government’s initial response
3.7 I put those complaints to the Treasury, the FSA, and GAD. Their initial response, in summary, was that:
(i) there had been no failure on the part of any of the prudential regulators or GAD properly to exercise their functions in respect of the Society. At all times those regulators and GAD had acted reasonably and properly, in the context of and having regard to the regulatory regime as it had been at the relevant time;
(ii) the nature and scope of that regime had been determined by legislation and by regulatory policies which informed and were adopted under the applicable legislation. At all times, the policies adopted had been proper ones and had been the result of choices which Parliament and Ministers had been fully entitled to make;
(iii) none of the complaints made by the complainants disclosed reasonable grounds for concluding that any of the public bodies responsible for the prudential regulation of the Society or GAD had been guilty of maladministration.
3.8 I was not satisfied that this response resolved the complaints which had been made to me and so I decided to continue my investigation.
3.9 I appointed an in-house team of investigators to conduct the investigation. I also appointed both legal and actuarial advisers to assist me and my investigation team. In addition, I arranged for the actuarial advice I received to be peer reviewed. The advice of both sets of professional advisers has greatly informed (and is fully integrated into) my report.
Terms of reference
3.10 The terms of reference for the investigation were:
- To determine whether individuals were caused an injustice through maladministration in the period prior to December 2001 on the part of the public bodies responsible for the prudential regulation of the Equitable Life Assurance Society and/or the Government Actuary’s Department; and to recommend appropriate redress for any injustice so caused.
Conduct of the investigation
3.11 In carrying out the investigation, we have reviewed:
- the operational and policy files of the public bodies whose actions were under investigation;
- all the documentary evidence from other sources that was available to Lord Penrose when he conducted an inquiry into the events which led to the Society closing to new business, the report of which was published in 2004;
- transcripts of evidence given to the Penrose inquiry, to the Baird inquiry, an internal FSA inquiry in 2001 into their role in the relevant events, and to my first investigation by current and former officials and actuaries connected with the prudential regulation of the Society;
- the relevant working documents and emails of those officials and actuaries; and
- publicly available material (such as actuarial papers and discussions); and historical and other material held at the National Archives, the British Library, and the libraries of the DTI, the Institute of Actuaries, and the Institute of Chartered Accountants of England and Wales.
3.12 At the end of January 2007, I sent the public bodies a first draft of my provisional views on relevant facts, whether maladministration had occurred and, if so, whether it had resulted in any injustice to complainants. This followed the sharing of draft excerpts from the factual background Parts of this report with the parties to the complaints.
3.13 In March 2007, I disclosed the provisional report of my actuarial advisers to the public bodies. Those bodies, in April 2007, made substantial representations to me about my draft report and about the content of the professional advice that had informed that draft report. In the light of those representations, I agreed to conduct a fundamental review of my draft report and to seek further professional advice.
3.14 The revised draft report that was the result of that review was issued in February 2008 to all the interested parties. My final report takes into account all the responses I received to those drafts.
