Ombudsman to start new Equitable Life inquiry

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The Independent Online

The Parliamentary Ombudsman, Ann Abraham, is set to announce the reopening of her inquiry into Equitable Life today, reigniting policyholders' hopes of receiving government compensation for losses incurred by the collapse of the insurer three-and-a-half years ago.

The Parliamentary Ombudsman, Ann Abraham, is set to announce the reopening of her inquiry into Equitable Life today, reigniting policyholders' hopes of receiving government compensation for losses incurred by the collapse of the insurer three-and-a-half years ago.

A special report revealing her decision - which comes after two-and-a-half months of consultation with MPs, policyholders and the current board of the society - will be laid down before Parliament today.

Ms Abraham's initial inquiry into Equitable, published last summer, looked at the regulation of the society between 1999 and 2001, clearing the Financial Services Authority of allegations of regulatory failure. However, the report was heavily criticised for not looking at the period before 1999, when the Treasury and Department of Trade and Industry were responsible for the society's regulation.

The Ombudsman has come under renewed pressure to reopen her inquiry in recent months, after Lord Penrose's report into the insurer, published in March, highlighted a catalogue of regulatory failings pre-1999, singling out the Government Actuary Department (GAD) as being at the heart of the debacle.

While the GAD currently falls outside the Ombudsman's remit, it has since emerged that a relatively straightforward piece of secondary legislation could widen her scope, allowing her to look at the GAD, and at the Government's role as the society's regulator pre-1999.

Today's statement from the Ombudsman will reveal exactly what the boundaries of the new inquiry are likely to be. Andrew Tyrie, the Conservative Treasury spokesman, who has been at the forefront of the campaign to get the Ombudsman's inquiry reopened, said: "It is essential at least that the appalling catalogue of regulatory failure at an operational level, highlighted by Lord Penrose, particularly in the Government Actuary Department, is fully investigated for possible maladministration.

"I believe hundreds of thousands of policyholders and annuitants, most of them vulnerable and elderly, desperately need the proper investigation that has been denied them by the Government for so long."

Dr Vince Cable, the Treasury spokesman for the Liberal Democrats, said: "I would very much welcome a proper Ombudsman investigation into Equitable, seeing as it was clear from the Penrose report that there was maladministration as well as a failure of the system.

"We express the hope that this happens within a reasonable timeframe - its already been three years since Equitable closed its doors to new business."

Dr Cable added that if the Ombudsman's report confirmed Lord Penrose's findings of maladministration, it would have no option but to call on the Government to pay compensation to policyholders and annuitants. The Government, however, denies it has any responsibility to compensate Equitable members.

Earlier this year, the board of Equitable dropped plans to sue the Government, saying it was putting its hope in the Ombudsman to secure compensation for policyholders.

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