Injustice Unremedied

In July 2008 the Parliamentary and Health Service Ombudsman presented a report concerning the prudential regulation of the Equitable Life Assurance Society (HC 815, session 2007-08, ISBN 9780102957303). The report made ten findings of maladministration, determined that this maladministration had led to injustice, and made two recommendations: that the Government should apologise to policyholders for the serial regulatory failure and; that the Government should establish and fund a compensation scheme. The Public Administration Select Committee also reported on this matter: "Justice delayed" (HC 41-1, session 2008-09, ISBN 9780215525536). On 15 January 2009 the Government published their response: "The prudential regulation of the Equitable Life Assurance Society" (Cm. 7538, ISBN 9780101748124). The Government accepted some, but not all, of the Ombudsman's findings and apologised to policyholders. The Government decided to reject the central recommendation - that the Government should establish and fund a compensation scheme. Instead Sir John Chadwick was appointed to advise the Government on the extent of relative losses suffered and what proportion might be attributed to the maladministration before some ex gratia payments were made. This report presents the Ombudsman's assessment of the Government's response. She is disappointed that the Government rejected many of the findings and is unpersuaded by the basis for those rejections. The Ombudsman has three concerns about the "alternative approach" or Chadwick process, which she brings to Parliament's attention: it breaks the link between injustice and remedy; the lack of clarity about the process; selective use of the Penrose report in the Government response.