- Damning report highlights failings in Equitable Life compensation system
- Treasury accused of dragging its heels and administrative failings and imposing arbitrary deadlines
- But at least the Government deserves some credit for actually paying money out – after so many years of delays
The Public Administration Committee has published its report highlighting major failings in the scheme set up to pay compensation to Equitable Life victims. This scandal has been dragging on for so many years that many of the one million people affected have already sadly died before receiving any of the money due to them. This Report shows that even once the compensation agreements have been put in place, many of those who should be receiving their money are either still waiting or have not been traced.
The PAC blames the Treasury for being slow and also highlights failings in the administration of the scheme itself. These obviously need to be addressed urgently, so that compensation payments can be speeded up.
This Government is at least making payments – the last Government refused time and again: It is important to stress, of course, that this Government should be applauded for actually setting up a scheme and getting on with paying money out. The last Government did everything it could, for many years, to avoid paying anything at all. Indeed, the victims were left fighting for years and, despite several reviews and a damning verdict from the Parliamentary Ombudsman, nothing was actually done. Elderly people, who had sometimes lost their life savings, were left in the cold. It is a shame, therefore, having honoured its pre-election commitments to make payments, that the compensation scheme is not working as well as it should.
The administrators and NS&I are not doing the actual calculations – relying on independent actuaries: Clearly, the complexity of the payment mechanism will mean that it takes time to work out what payments are due. It is also the case that the actual calculations are not being done by the Treasury itself and the compensation scheme is reliant on figures being supplied by independent actuaries. The calculation of the payments and confirmation of how the actual figures are arrived at need to be provided to all and that will require the actuaries to supply their calculations.
NS&I is hugely efficient – hope this does not affect its image: The PAC report is critical of the role played by NS&I as the administrator of the scheme. However I believe that National Savings is one of the most efficient and effective financial services providers. It manages money for 25 million customers and its latest annual results show a customer satisfaction rating of over 99% for customer service accuracy and customer service timeliness. It is a shame, therefore, that it has been unable to achieve such success with the Equitable Life compensation payments.
I believe many of the problems highlighted by PAC have been addressed: I believe that many of the failings identified by the PAC report – which were highlighted in its inquiry over two months ago, are already being addressed. More payments have been made, more people have been traced and further information is being provided to those who want more detail. Clearly, however, there is further to go and payments need to reach the victims as soon as possible. After waiting so many years, after so much money has been spent on inquiries and reviews, the victims should not need to fight any more and I hope that this scandal will finally be dealt with properly in the coming months.
Government could consider extending the arbitrary March 2014 end-date: There is a concern about the fact that the Government has said the compensation scheme must end by March 2014. It recommends that the Treasury should advertise the fact that the scheme has a closing date as soon as possible, and also that it should make further efforts to trace those it has not yet managed to contact. I would suggest that it might consider extending the deadline beyond March 2014 if the scheme is slower than expected at tracing and paying the victims. There is no logical reason why the compensation payments must be made by a cut-off date and, in the interests of fairness, the scheme could be extended to ensure all who are due the money can be paid.
Savers need to know they will be fairly compensated if there is regulatory failure: Of course it is important to protect taxpayers’ resources and the compensation scheme must not be wasteful of public money. But if the Government is found to be responsible for failures which have caused losses to ordinary citizens and if official regulators are found to have failed to carry out their duties, or misled people in a way that causes them financial losses, then taxpayers have to pick up the costs. It is important for the proper functioning of our financial system, that we ensure Regulators act properly but also that, if there is regulatory failure, savers and investors know they will be compensated. If they lose confidence in the system, then the economy as a whole will lose out.