UK's Parliamentary Ombudsman Rules Out Compensation For Equitable Investors

by Robin Pilgrim, LawAndTax-News.com, London

02 July 2003

UK Parliamentary Ombudsman, Ann Abraham on Tuesday released her report into Equitable Life, in which she ruled out the possibility of compensation for policyholders.

The mutual life insurer closed to new business two-and-a-half years ago, and then proceeded to slash the value of a million policyholders' investments after losing a legal wrangle involving so-called guaranteed annuity rates, which were sold as part of pension plans.

The move has disgusted consumer groups, who have argued that the decision to exonerate the Financial Services Authority (FSA) and its predecessor from blame may have resulted from the narrow focus of the Ombudsman's investigaion, which looked at the FSA between January 1999 and December 2000.

On Tuesday, Ms Abraham announced that:

'I have the very deepest sympathy for those who have suffered financial loss as a result of events at Equitable. However, given my very limited remit and the conclusions I have drawn from the investigation, I do 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.

She continued: 'It would be offering policyholders false hope were I to suggest otherwise. I have therefore decided not to investigate further complaints about the prudential regulation of Equitable.'

Had the FSA been found guilty of maladministration, the government would have been obliged to compensate Equitable Life policy holders.

In her report, Ms Abraham sought to draw Parliament's attention to the 'apparent mismatch between public expectations of the role of the prudential regulator and what the regulator could reasonably be expected to deliver'.

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