EQUITABLE LIFE MEMBERS
THE PARLIAMENTARY OMBUDSMAN
Last Updated: Friday, July 18, 2008 05:33 PM
INDEPENDENT ENQUIRY AND THE OMBUDSMAN SCHEME
2. Sir Gordon Downey's Letters to the Times
The Parliamentary Ombudsman is in charge of looking into maladministration by government department. In our case this is the DTI/Treasury/FSA. We feel that we should receive financial recompense to the fund if maladministration is proved.
On 1 July 2003 the Parliamentary Ombudsman Ann Abrahams produced a limited report where she found that the regulators had done an adequate job. Click here for the press release. This was a very limited inquiry into a period between Jan 1999 and December 2000. She then extended this inquiry and brought out her very comprehensive final report, in July 2008 where she found maladministration by the regulators.
The Parliamentary Ombudsman investigates complaints that injustice has been caused by maladministration on the part of the government departments or other public bodies.
PLEASE write to your MP and tell them to support the PO's report and don't let it be ignored as so many reports have been in the past.
The Parliamentary Ombudsman can be found on www.ombudsman.org.uk. She must be contacted through an MP.
Enquiries Officer,
Office of the Parliamentary Ombudsman,
Millbank Tower,
London SW1P 4QPEnquiries: phone: 0845 015 4033 or 020 7217 4051
Email: OHSC.Enquiries@ombudsman.gsi.gov.uk
2. SIR GORDON DOWNEY'S LETTERS TO THE TIMES
This is for interest, Sir Gordon Downey an Equitable annuitant wrote to the Times regarding the first Parliamentary Ombudsman report that came out in 2003.
Letter to the Times 2 July 2003
Sir,
........I am appalled at the statement issued by the Parliamentary
Ombudsman this morning, washing her hands of any further involvement
in the Equitable scandal. This directly contradicts her previous
undertakings to MPs to consider conducting an inquiry into the
prudential supervision exercised by the DTI and the Treasury, prior to
1999, in the light of the Penrose report.
It appears that Ms Ann Abraham now takes the view that prudential
supervision was essentially a matter of ensuring the solvency of life
assurance companies. This is a bizarre interpretation and certainly
not one I would recognise as a former Treasury official and chairman
of the Financial Intermediaries Managers and Brokers Regulatory
Association and the Personal Investment Authority. The legislation at
the time provided ample powers to intervene and to place restrictions
on what types of business companies could undertake.
Yet, armed with these powers, the regulators: allowed the Equitable to
sell unguaranteed policies, as low-risk products, without disclosing
that prior guaranteed policies existed, representing huge contingent
liabilities on the common fund; endorsed the society's attempt to
redress the balance by paying differential bonuses, later ruled
illegal; and allowed the society to trade with totally inadequate
reserves.
In the light of Ms Abraham's statement, Equitable members will be very
apprehensive that it appears that the guardian charged with examining
injustices caused by maladministration has not only prejudged the need
for a review but also the answer which such a review would yield. I
trust that our MPs will see her responsibilities (and theirs)
differently.
Yours faithfully,
GORDON DOWNEY
(Parliamentary Commissioner for Standards, 1995-98)
Letter to the Times October 2001
"Is
there a more telling contrast between the government's indifference to
pensioners over the Equitable crisis and their response to farmers
over foot and mouth?
The Equitable was regulated by the DTI and The Treasury until 1998.
During that time they allowed the Society to start selling
unguaranteed policies without disclosing that outstanding guaranteed
annuity rates represented a huge potential liability for new savers;
to introduce differential bonus rates subsequently ruled illegal by
the courts; to operate with reserves which were apparently known to be
suspect; and to claim throughout that it was selling a low-risk
product, coupled with prudent management and the benefits of
mutuality.
At the same time, successive governments not only encouraged saving in
personal pension schemes but required those schemes to be converted
into annuities.
Yet the government and its creature the FSA, are now standing by while
pensioners are having their current and future income slashed.
Surely, the time has come for active intervention before it leads to a
major collapse of confidence in the pensions industry.
To my mind, the only way of averting a major crisis is for the
government and the industry to underwite the Equitable for a period of
years to stem the flight of funds and to enable the Society to manage
its resources effectively and build up reserves. On the experience of
other such operations (for example, the secondary banking crisis of
the 1970's) a rescue, by restoring confidence, could be achieved at
remakably little cost.
The industry is entitled to know that, when it takes part in such an
exercise, any costs for which the regulators are properly responsible
should be borne by them. This adds to the case for a fully independent
inquiry into the role of the regfulators, past and present, at all
material times. But this will take time and the need for action is
immediate.
Letter to the Times of 29 September 2001
Sir, I am astonished at the decision of the Parliamentary Ombudsman (report, Business, September 27) that he will not look into complaints about the regulators’ handling of Equitable Life until Lord Penrose has published his report.
The ombudsman cites “wasteful duplication of effort”. But surely this is not the point. Lord Penrose has been appointed by the Government and reports to Treasury ministers. Their department is one of the regulators involved and they are free to accept or reject any recommendations. Lord Penrose has no power to compel witnesses to attend or to produce information. The ombudsman is an officer of the House of Commons and reports to Parliament, which can “send for persons and papers”.
The remits are also quite different. Lord Penrose is charged with inquiring into the circumstances leading to the current situation, “taking account of relevant life-market background”, and identifying any lessons for the future. The ombudsman looks at allegations of maladministration leading to an injustice. I believe that the present situation is largely attributable to maladministration on the part of the regulators.
Of course there will be some overlap. But there is no reason why the Government’s wide-ranging inquiry should take precedence over (and necessarily compromise) Parliament’s own. Equitable policyholders are suffering an injustice now and their grievances should not be kicked, yet again, into the long grass.
Yours faithfully,
Gordon Downey
Former Chairman of FIMBRA and the Personal Investment Authority