Equitable Members Action Group, which claims support from 40,000 policyholders, is urging the Government to follow the recommendations of the parliamentary ombudsman (PO) for a commission, and to “marginalise” the report of Sir John Chadwick due to be published next week.
Retired judge Chadwick was appointed by the last Government to adjudicate on making payments only to classes of policyholder who had been “disproportionately affected”, and was steered by the Treasury towards a complex discount mechanism which reduces the value of any payouts.
The Treasury had hinted that compensation would be limited to £1 billion rather than the £4.7bn implied by the PO’s report.
Paul Braithwaite, general secretary of Emag, said yesterday that 380 MPs had signed a pledge before the election to support “proper compensation” from an independent scheme, while new Conservative Treasury minister Mark Hoban had said he was “committed to implementing the ombudsman’s recommendations”.
Ann Abraham, the ombudsman, was highly critical of the last Government’s response and its terms of reference for Chadwick.
Braithwaite has told Emag members: “The Treasury’s intention, based on Sir John Chadwick’s work, is likely to be a clever actuarial fudge which will seem to show that, even if Equitable Life had been properly regulated, compared with the worst performing pension life companies we have hardly lost much at all.”
He says it was “outrageous” that Chadwick was allowed to proceed with unchanged terms of reference, which were “entirely incompatible with the PO’s recommendations and hence totally at odds with the coalition’s promise and MPs’ individual pledges”.
Braithwaite commented: “Chadwick’s report was conceived to both delay and to minimise payouts on what was essentially a charity hardship scheme, on the instructions of the Labour Government ... We want independent assessment of the losses that will form the basis of compensation, not just independent distribution of compensation.”
Emag has been refused by the Treasury an explanation of the critical methodology used by actuaries Towers Watson to determine the relative performance of Equitable Life and other insurers in the 1990s.
