Report criticises government over Equitable Life

The government's management of the Equitable Life scandal has been branded as "shameful" by the parliamentary ombudsman.

Ann Abraham criticised the "deeply disappointing" treatment of Equitable Life victims in response to her earlier report on regulating the society and the failure by the government to set up an independent tribunal.

Almost a year ago, Abraham called on the government apologise to those who had suffered from the maladministration.

She also recommended that the government should establish and fund a compensation scheme for Equitable Life policyholders.

The report had found the government responsible for ten counts of maladministration, which led to the near collapse of the private pension provider.

Only those policyholders who had suffered "disproportionately" have been promised compensation by the Treasury.

The government also appointed appeal court judge Sir John Chadwick to create a scheme to benefit those hardest hit.

But today Abraham responded: "The government's response to my report was deeply disappointing. It provided insufficient support for the rejection of my findings of maladministration and injustice.

"It also begged a rather larger question as to what the purpose of regulation was supposed to be."

Abraham added: "Whatever the outcome of the work to be done by Sir John, it is clear that not everyone who has suffered injustice will be eligible for a payment and that not all of the injustice suffered will be put right.

"The injustice I identified in my report will not therefore be remedied as a result of the government's response."

The latest report on the issue of compensation was welcomed by Equitable Life.

Chairman Vanni Treves called on the government to acknowledge their "moral duty" by accepting the ombudsman's findings and conclusions.

He said: "This is not a minor infringement. This was a major failure of regulators which lasted for a decade."

Liberal Democrat spokesman Vince Cable and Conservative MP Andrew Tyrie have tabled an early day motion in support of the report.

Cable said: "The government has used every cynical trick in the book to duck its responsibilities to Equitable Life policyholders.

He said the government must accept the recommendations made by Abraham to compensate those who had suffered loss.