Ann Abraham’s report into the collapse of Equitable Life, due to be published next week, makes damning reading, according to those who have seen a summary of its findings.
In brief, her long awaited report is expected to heap blame on a string of Government bodies, including the former Department for Trade and Industry, the Treasury, the FSA and the Government Actuaries’ Department for failing to adequately supervise the insurer which lost billions of pounds of policyholders’ money following its near collapse in 2000.
But Ms Abraham, as Parliamentary Ombudsman, only has the power to recommend compensation for losses and cannot order the Government to do so. The cost of compensating Equitable’s 1m policyholders is estimated to be £4bn.
No doubt the Government will take its time in considering the report before accepting or rejecting its conclusions, but judging by its previous conduct in such matters, policyholders shouldn’t hold their breath.
The Government’s filibustering on this issue has been nothing less than shameful. It sought to delay the publication of Ms Abraham’s final report for as long as possible by responding to her initial findings last year with a 500-page rebuttal.
Calls for compensation, however, couldn’t have come at a worse time. The Government’s finances are already under strain and are likely to worsen as the economy heads into a recession.
But the Government set a dangerous precedent when it bailed out Northern Rock depositors last October and more recently increased the compensation payable to members of final salary schemes who lost pensions when their companies went bust.
My guess is that the Government will eventually provide some form of compensation, but only after years of wrangling.
The Equitable Members Action Group has already launched 20 regional groups to lobby MPs for compensation and EMAG leader, Paul Braithwaite, has said it will extend the network later, if necessary.
But policyholders had better be prepared for a long haul.
For more on EMAG visit: http://cookham.com/community/equitable/
Posted by Pamela Atherton
It might look a tad more professional for you to link to the websites of the group about whom you’ve written - EMAG and not the fraternal one ELM. The correct ones are:
“www.emag.org.uk” and “www.emagregional.org.uk”
I can’t share your lordly pessimism and frankly, it doesn’t help.
FYI The report will be published on Thursday 17th July. It’s the biggest and most thorough ever undertalken by the PO and runs near 3,000 pages.