The Public Administration Committee has today published a report looking at how the Government should deal with compensation for Equitable Life policyholders.
The report welcomes the fact the Financial Secretary to the Treasury has made clear that the Government accepts all ten findings of maladministration made by the Ombudsman.
However, the Committee believes there is a fundamental incompatibility between the position of the Ombudsman and Sir John Chadwick’s approach. If the Government’s proposals remain based on Sir John’s existing terms of reference the Committee agrees with the Ombudsman that will be an “unsafe and unsound” basis on which to proceed.
The MPs recommend that the Government re-engages Sir John Chadwick to establish what conclusions he would reach under terms of reference which reflect all ten of the Ombudsman’s findings. The committee believes this work can be done in parallel with the Independent Commission’s work to design a compensation scheme so as not to delay payment to policyholders.
However, should the Government announce the sum available for compensation as part of Spending Review, it must specify how it has adjusted the final loss figure to take account of the need to balance fairness to the taxpayer and affordability. Only in this way will the Government meet its commitment to implement the Ombudsman’s findings in full.