A glimmer of light at last at the end of the Equitable Life tunnel
Tuesday evening saw yet another debate on Equitable Life in the House of Commons. It was on a motion tabled by the Conservative front bench:
That this House notes that the Ombudsman published her report on Equitable Life in July 2008, that the Government did not make its response until January 2009, and that its rejection of some of her findings was successfully challenged in the High Court; believes that the delays caused by the Government since the publication of the Ombudsman's report have led to further and unnecessary hardship for Equitable Life's policyholders and have done further damage to the UK's savings culture; and calls on the Government to set a clear timetable for implementing the Ombudsman's recommendations and remedying the injustice suffered by policyholders.
There was an amending motion from the Government:
That this House recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman; notes that the High Court ruled that the Government's response to the Ombudsman's recommendations on Equitable Life, its establishment of an ex gratia payment scheme, and the terms of reference given to Sir John Chadwick were a rational response to the Ombudsman's report; notes that Sir John expects to produce his final advice in May; welcomes the Government's commitment to respond with details of a payment scheme within two weeks of receiving this advice; welcomes the Government's determination to establish a scheme administratively quicker and simpler to deliver than that envisaged by the Ombudsman; further notes that to abandon the Chadwick process so close to completion would add delay and hardship for policyholders; welcomes the Government's view that, while it cannot prejudge Sir John's final advice, there is a strong case for policyholders who have passed away to be included in the scheme and that it is neither desirable nor administratively feasible to means-test every individual policyholder; and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life.
Despite several Labour MPs making speeches very hostile to the Government, with Barry Gardiner (Brent North) being the most forceful and eloquent, the Government motion was passed by 291 votes to 236 votes. Those are the hard facts and anyone who has followed the Equitable Life saga since the mid-1990s will be inclined to let out a sigh of despair and conclude that nothing much has changed and that the 1.5 million policyholders - average age now 79 - are still no nearer knowing what compensation, if any, they will receive. That would be an unduly pessimistic view.
What struck me about the debate was the degree of consensus between the Tory and Labour frontbenches, not about where we have been with this but where we go next. Despite the wording of their motion, the Tories agreed that the process now being overseen by Sir John Chadwick should be allowed to run its course, not abandoned in favour of starting again with the conclusions of the Parliamentary Ombudsman's report. Sir John's final report is due in mid-May and the government promised a response within 14 days with a timetable for implementing his recommendations. Of course, this may be a pledge that the Conservatives inherit but they gave no indication during the debate that they were unhappy with it.
What the opposition team led by shadow Treasury spokesman Mark Hoban said was that they would hope that, if the Chadwick review is genuinely independent, it will come up with some proposals that are nearer to the original Ombudsman's report than so far supported by the Government. Of course, there are severe doubts among policyholders that Chadwick is anything other than a Treasury stooge working to a brief to come up with the most limited, cheapest scheme he feels he can get away with. This view was forcefully articulated by the Equitable Members' Action Group in the wake of the publication of Sir John's third report a couple of weeks ago. This seems rather harsh in the light of the proposals for streamlining the compensation process by marshaling the policyholders into around 20 groups with similar characteristics and suggesting that rather than work through each case individually (an estimated 30 million investment decisions would be involved), the compensation ought to be awarded on a generic basis depending on which sub-groups they fall into. The Government through the Chief Secretary to the Treasury, Liam Byrne, praised this approach while the Tories remained tight-lipped on it. They preferred to highlight the lack of confidence that policyholders have in Sir John Chadwick, stopping well short of laying into him themselves.
Mr Byrne made by far the most conciliatory speech of any Government minister on Equitable Life. He made two key points which ought to be widely welcomed: he ruled out means testing as a way of judging who should get compensation and he more or less committed the Government to offering compensation to the estates of deceased policyholders.
There are still many unanswered questions though, not least what compensation will be offered and how long it will take to distribute. There was talk on both sides of the House of moving very quickly when it comes to getting money into the hands of priority groups although no consensus on what those groups would be and no firm information on the mechanism that will be used (or put in place from scratch), although I was pleased to see one Labour MP, Sally Keeble, did suggest using the established mechanism of the Financial Services Compensation Scheme. I have thought for sometime that this is the most logical solution.
There was a concerted push by the Liberal Democrats to extract a commitment to make interim payments to policyholders but this didn't win enthusiastic support from the Tories and was ruled out by the Government.
The conclusion I have come to on reading through the debate in Hansard a few times is that there is now very little difference in the position of Labour and Conservative front benches, although the Tories hint at a more generous settlement should Chadwick fall short of their hope that he will recommend a scheme similar to that envisaged by the Ombudsman last year. Attempts by Government ministers to get the Tories to be specific on this commitment forced Mark Hoban onto the defensive with the plea "We do not know what the bill will be". He almost sounded for a moment as he was practicing for when he might be a minister himself. One thing I have learnt to refrain from referring to any twist or turn in this sorry tale as the 'final chapter' again.
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