RegulationCorporate GovernanceTories attack Equitable Life compensation plan

Tories attack Equitable Life compensation plan

Government plans to appoint senior judge to decide compensation for policy holders under fire.

The government has been accused of foot-dragging by the Conservative Party
after saying it would appoint a senior judge to decide which Equitable Life
policyholders will receive compensation after the near collapse of the insurer
in 2000.

Yesterday, Chief Secretary, Yvette Cooper, issued an apology for the state’s
role in the collapse of the mutual but said ex gratia payments would be limited
to those “disproportionately affected” by regulators’ failings.

Cooper announced plans to appoint an Appeal Court judge to decide which of
the million-plus policy holders — who lost up to an estimated £5bn when
Equitable nearly collapsed – should receive compensation and by how much.

She said that compensation payouts would depend on the circumstances of each
victim.

Shadow Financial Secretary and qualified accountant, Mark Hoban, accused the
Treasury of having sat on a report into the Equitable debacle last summer by
parliamentary ombudsman Ann Abraham.

The report accused government departments and regulators of failing to
properly scrutinise the finances of Equitable Life before its near collapse.

“The Treasury could have decided to compensate Equitable policyholders when
Lord Penrose reported five years ago,’ Hoban said. ‘Instead it has dragged this
out to save face for the Prime Minister but it is policyholders who have paid
the price for this.’

‘Now the Government has conceded the case for compensation it can no longer
drag its feet. Justice cannot be denied any longer.’

He said he was surprised at the suggestion that compensation payments would
be means tested’.

Meanwhile, the accountancy profession’s disciplinary body is still months
away from ruling on Ernst & Young’s work as an auditor of Equitable Life.

The tribunal of the Accountants’ Joint Disciplinary Scheme (JDS) finished
hearing the case in November 2007, but the final report is not finished.

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