Equitable Life policyholders are now wholly reliant on the findings of Lord Penrose's report into the demise of their society after the Parliamentary Ombudsman slammed the door on compensation hopes.
Ann Abraham will today publish her long-awaited report into whether there were failings in the regulation of Equitable between January 1999 and December 2000, when the society closed to new business under the weight of its costly guarantees.
But she found "no evidence to suggest that the Financial Services Authority had failed in its regulator responsibilities".
Despite admitting that the real cause of Equitable's problems would only be found through a much wider investigation, she says that she does "not believe that anything would be gained from my further intervention, nor do I believe I could meet the expectations of policyholders in terms of the remedies they are seeking".
The Ombudsman had said she would await the publication of the Penrose inquiry before deciding whether to extend her investigation to cover the period before January 1999.
The Conservative Treasury spokesman, Stephen O'Brien, said: "[The Ombudsman] has slammed the door, in a manner that will be soul destroying for those who have lost, by taking an immediate decision not to extend her investigation. I will continue to press vigorously for her investigation to be extended. Policyholders and annuitants thought they were doing the right thing by providing for their retirement, but the authorities now seem not to care."
Policyholder action groups had hoped the Ombudsman would find evidence of maladministration by government regulators. This would have opened up the possibility of government compensation. "It is very disappointing that the Parliamentary Ombudsman took so long to produce so little," Alex Henney, chairman of the Equitable Members Action Group, said.
All hopes of redress now rest on the findings of the Penrose inquiry, which is investigating the history of the society back to the 1950s. It has, however, been delayed and not likely to be published before October.
MPs have been clamouring for the Treasury to publish the report in its entirety as soon as possible. Charles Thomson, chief executive of Equitable, has said he is prepared to sue the Government if Lord Penrose finds evidence of negligence. "The Ombudsman's ability to investigate was clearly very restricted. Penrose's remit is much wider. We must now wait for it to be published before seeing what action we can take," Mr Thomson said.
Ms Abraham's report will say that the regulation of insurance companies was never designed to "provide complete protection for all policyholders" and that public expectations of the regulator were too high. Her findings chime neatly with the independent report into the FSA's handling of Equitable's demise. Ronnie Baird concluded that the "die was cast" before the FSA took on board supervision of the company in 1999.Reuse content