Kelly curries favour with MPs on Equitable

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The Independent Online

Ruth Kelly, the Financial Secretary to the Treasury, yesterday tried to head-off calls for compensation for Equitable Life policyholders by holding private briefings meetings with MPs before a public hearing of the Treasury Select Committee.

Ruth Kelly, the Financial Secretary to the Treasury, yesterday tried to head-off calls for compensation for Equitable Life policyholders by holding private briefings meetings with MPs before a public hearing of the Treasury Select Committee.

Ms Kelly is due before the committee this morning and is expected to come in for severe criticism for using the Penrose report, published last week, to lay the blame for the society's demise on its former management and the regulatory regime of the previous government.

Ahead of this meeting, she invited all MPs on the committee for one-on-one briefings and three MPs yesterday took up the offer. While the Treasury said this unusual step was driven by the complex issues contained within the 818-page Penrose report, some MPs thought the move was ill-advised. "Efforts to hold pre-meetings with MPs could easily be mis-interpreted by policyholders," Andrew Tyrie MP said.

The minister will also have to find an answer to a gauntlet laid down by the Conservatives yesterday for reopening the Parliamentary Ombudsman's inquiry into Equitable's fate. Mr Tyrie yesterday called on the Government to implement a special parliamentary device - a negative statutory instrument - that would allow the ombudsman to widen her remit to include the Government Actuaries Department (GAD).

"Given the absolutely central role the GAD played in the supervision of Equitable Life, it is important to include that department in any scrutiny," Mr Tyrie said. "The ombudsman's remit could be extended without any commitment of Parliamentary time. As the opposition would support this change, it could be made immediately. I hope the Treasury Select Committee will press Ruth Kelly on this matter."

Lord Penrose described GAD as "complacent" in his report. He will give evidence to the committee and MPs will question him on what the consequences of his findings should be. He concluded that the society was "the author of its own misfortunes" but said the "regulatory system has failed policyholders".

He was barred by the terms of reference set down by the Treasury from apportioning blame and assessing whether compensation to policyholders was due. But MPs will press him to say who he believes was liable, whether there is a case for maladministration against regulators and whether compensation is owed. The Government has so far ruled out compensation but policyholders, MPs and the society itself have asked Lord Penrose to look at it.

MPs are also expected to identify the extracts of Lord Penrose's report that expose failures perpetrated by regulators in the years since Labour came to power.

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