Letter from the Parliamentary Ombudsman – Ann Abraham

Letter from the Parliamentary Ombudsman – Ann Abraham

Many members of the ELTA community have asked what is ELTA’s position on the letter sent out by Ann Abraham, the Parliamentary Ombudsman. The letter from Ms Abraham is set out below, slightly reformatted after it was scanned into my PC.

I am always a little reluctant to “tell” any individual what to say, partly because it goes against my own instincts partly because I dislike being told what to think and do, partly because we are not a political party of a Trade Union but mainly because ELTA is a free association of individuals who have a common problem, otherwise known as Equitable Life and their treatment of the With-Profits Annuitants.

However, here are the thoughts and ideas from Nicholas Oglethorpe, and myself, which you may wish to build into your own response to Ann Abraham.

a) Lord Penrose shows that Equitable's difficulties began long before 1st. January 1999 at a time when the DTI was responsible for prudential regulation.

b) Lord Penrose makes it clear that the GAD was acting as agent for the DTI. The work of the GAD is therefore the work of the DTI, which is a body within the scope of the Parliamentary Ombudsman's activities.

c) Lord Penrose showed that Equitable had no genuine smoothing policy as it pretended, and that it was essential to prudent management

d) The new inquiry must be extended back at least from the time that the Equitable's estate began to be dispersed, which is 1973.  1973 is also an important date in that it was when PRE was first given official recognition in the Insurance Companies Act of that year This the year when Mr Sherlock and Mr Ranson took over from Maurice Ogborn, and the pivotal year when the Society decided to persist with its new sales drive to replace FSSU business in spite of swingeing capital losses- as a result of which reversionary bonus levels were maintained. It's also the year in which there was a switch to non-guaranteed bonuses which didn't need to be reserved for. In essence, therefore, it was the the year in which the road to selective discrimination against newer policyholders, non-disclosure and misrepresentation began.

e) The new inquiry must include the actions or inactions of these Government departments on whom the public rely to use their expertise to protect them, the public, from errors of omission or commission that lie outside their own reasonable experience.

f) The new enquiry must invite contributions from the various user associations that have been formed to protest at the action of the Society, such as ELTA, EMAG and others.

g) The new enquiry must invite contributions from a reasonable wide selection of individuals who Woit-Profits Annuitants of the Society and whose experience of dealing with the Society itself and various Government departments will contribute to a greater understanding of the problems that have been created.

h) The new enquiry must invite contributions from those members of the public or professional organisations that have written extensively on the Equitable Life saga and whose insights and conclusions will contribute a greater understanding of how and why the events that have occurred were actually caused.

i) When the inquiry is reopened, it must be conducted in a fair manner which does not invite the legal challenge which the first Report has naturally attracted. This will require procedure in accordance with natural justice, which was not perceived to have been the case with the first inquiry.

OMBUDSMAN

OFFICE OF THE PARLIAMENTARY COMMISSIONER FOR ADMINISTRATION

 MILLBANK TOWER, MILLBANK, LONDON SW1 P 4QP.

 SWITCHBOARD 020 7217 3000. FAX 020 7217 4000. DIRECT LINE 020 7217 4212

From the Commissioner

Ann Abraham

22 April 2004

Dear Sir/Madam

EQUITABLE LIFE

You will know that I conducted an investigation of a representative complaint about the prudential regulation of the Equitable Life Assurance Society during the period from 1 January 1999 to 8 December 2000.  The report of my investigation was laid before Parliament on 30 June 2003.

You may also know that, on 8 March 2004, the Treasury published the Penrose Report into the circumstances leading to the situation at the Society as at 31 August 2001.

In a letter to all Members of Parliament on 16 March 2004, I explained that, in the light of the Penrose Report and the Treasury's response to that Report, I would consider whether I should carry out any further investigation. 1 also said that, in order to assist me to come to a decision, I would in due course invite representations from a range of interested parties. I am writing to you as someone whose complaint we hold on file.

I would be happy to receive any representations that you wish to make on whether and, if so, in respect of which period and matters, I should carry out any further investigation into the regulation of Equitable Life, to the extent that I have jurisdiction to do so.  Such representations should be in writing and should reach me no later than 21 May 2004.

Please address representations to my Private Secretary, Iain Ogilvie, at the above address or by e-mail:

(equitable.report@ombudsman.gsi.gov.uk)

Yours sincerely

Ann Abraham

Parliamentary Commissioner for Administration