The Government's Response to my report
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- On 15 January 2009, the Government provided their response to my report by way of an oral statement to both Houses of Parliament. Later that day, the Treasury also published a Command Paper (Cm 7538), The Prudential Regulation of the Equitable Life Assurance Society: the Government’s response to the Report of the Parliamentary Ombudsman’s Investigation, which contained the detailed response of the Government to the findings and recommendations contained in my report.
- Ministers told the House that the Government accepted some, but not all, of my findings and apologised to the policyholders of the Society for the maladministration which the Government accepted had occurred.
- In addition, in their published response Ministers said that they had given careful consideration to my central recommendation – that the Government should establish and fund an independent, transparent, and speedy compensation scheme which would restore those relative losses sustained by policyholders – but that they had decided not to accept that recommendation.
- This rejection was said to be founded on three factors – the need to take into account:
- the degree of responsibility of the Society when designing a compensation scheme;
- the public purse and the wider public interest; and
- that ‘Parliament has accepted that it is not generally appropriate to pay compensation even where there is regulatory failure’.
- The Command Paper explained that, notwithstanding the above, the Government believed that action on their part was warranted and that, in the circumstances of the case in which it was said that some people had suffered ‘disproportionate impact’, some ex gratia payments should therefore be made.
- In order to achieve this, the Government set out what they described as an ‘alternative proposal’. Ministers had decided to ask Sir John Chadwick, a former judge of the Court of Appeal of England and Wales, to advise the Government on four issues. Those issues were:
- the extent of relative losses suffered by Equitable Life policyholders;
- what proportion of those losses could be attributed to the maladministration accepted by the Government and what to the actions of the Society and of other parties;
- which classes of policyholder had suffered the greatest impact; and
- what factors arising from this work the Government might wish to take into account when reaching a final view on determining whether the impact that had been suffered was disproportionate.
- The Command Paper also published the Terms of Reference within which Sir John will undertake this work. Sir John was required:
- to accept as correct and consider my findings only in so far as those findings had been accepted by the Government and to disregard findings which had not been accepted;
- to accept as definitive my account of the events as those were recited in the narrative and chronology sections of my report;
- to make such other findings of fact (if any) as he may think necessary in the light of the evidence contained in the other publicly available reports produced to date, including the Penrose Report and the Government’s response to my report;
- to review additional evidence should this be necessary to fulfil the terms of reference, but having regard to the need, so far as possible, for an expeditious process; and
- to seek written representations as appropriate from interested parties if he deems it necessary.
- The Command Paper contained no timetable for the completion of this work, although it said that Sir John would produce his final advice as soon as he is able to do so and will provide interim reports to the Government on an ongoing basis.
- Following the publication of the Government’s response, the Public Administration Select Committee took further evidence from a range of interested parties and published another report, Justice denied? The Government’s response to the Ombudsman’s report on Equitable Life. I appeared before the Committee and also provided further written evidence to assist it. This evidence focused on my assessment of the Government’s response to my findings and recommendations.
