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Equitable Life

Volume 704: debated on Monday 13 October 2008

asked Her Majesty’s Government:

What is their response to the report of the Parliamentary Ombudsman into Equitable Life.

My Lords, the Parliamentary Ombudsman has invited the Government to consider the issues raised in her report and reflect on what the response to it should be. The Government are considering the ombudsman’s report carefully and, as my right honourable friend the Chancellor of the Exchequer said in the other place on 8 October, they will give their response to Parliament shortly.

My Lords, I thank the Minister for that response. The first recommendation of the ombudsman was for a public apology from those public bodies, including the Treasury, which had let Equitable members down. The second recommendation was for a government-funded compensation scheme. To date, we have had only prevarication from the Government. Even if the Minister cannot give a detailed response today, will he say that the Government accept the principle of paying compensation? Also, can he give any good reason for the deafening silence that we have in place of an apology?

My Lords, it is right that the Government should give a full response to the ombudsman’s report, and all the issues that the noble Baroness has raised will be considered in that response. The report was published on 17 July. The Chancellor has indicated that we intend to give the response shortly. The noble Baroness will also recognise that Ministers have been rather busy on significant matters in recent weeks. Of course this matter is important; the Chancellor indicated in his reply that he intends to apply the full resources of the Treasury to the issue in the very near future.

My Lords, the Minister is being suitably vague about the next stage of the procedure—namely, when we will get any sort of response from the Government at all. At the very least, do the Government accept the recommendations of the ombudsman’s report in terms of timing—namely, that any scheme approved by Parliament should be established within six months of that decision being taken and that the scheme should complete its work within two years thereafter? The problem faced by pensioners, of course, is that they are getting older and the number of people who stand to benefit from the compensation scheme reduces with every passing day.

My Lords, the noble Lord has indicated how important, but how complex, the issues are and the requirements upon the Government to get their response right and to act accordingly. That is why we have taken time to consider the report, but we intend to make that statement shortly, as I have indicated.

My Lords, on how many occasions during the lifetime of the present Government, the past 11 years, have they not given effect to recommendations of the parliamentary commissioner for administration? Given that that important office was created by a Labour Government in 1967, and was one of their great achievements, has not the time come to look again at whether Governments should be compelled to comply with the commissioner’s recommendations?

My Lords, there is no question of the Government needing to be compelled to respond to the Parliamentary Ombudsman’s recommendations. We intend to respond to the report in the very near future. The noble Lord is absolutely right; the Government take the role of the ombudsman very seriously indeed. This is a very important report with profound implications for a number of our fellow citizens and it is only right that the Government should consider it fully and make a full and constructive response as soon as they are able to. That will be in the very near future.

My Lords, the noble Lord studiously avoided answering the important question posed by the noble Lord, Lord Lester: how many times have the Government not followed the ombudsman’s advice? Can we have an answer, please?

My Lords, I did not give an answer because I have not got one for that question. I wanted to emphasise that the Government of course regard the ombudsman’s reports very seriously indeed and that is why we are preparing our response to this very important report, published just before the Summer Recess. The whole House will recognise the importance of the issues and their complexity. The Government will respond to the report shortly.

My Lords, will the noble Lord get an answer to my noble friend’s question and give it to us in due course?

My Lords, I would be only too happy to do so, but the noble Lord will surely give the Government credit for the fact that they are approaching this report with due seriousness, as they have done all other reports of the ombudsman because it performs an important public service, which asks serious questions of the Government, to which they respond constructively.

My Lords, in one of the ombudsman’s comments blame was laid—in part, anyway—on the Financial Services Authority. When it was set up, it was told to regulate with a light touch. Given the current banking crisis, which was made considerably worse by that light touch, do the Government consider that the time has come to give new instructions to the FSA?

My Lords, we already appreciate the importance of changing aspects of the regulatory regime, but I hope that the House will count the number of times when representations come from supporters of the party opposite on the need for increased regulation of aspects of our financial services.

My Lords, can my noble friend indicate how often the Conservative Government produced a report within a similar time? I think that the answer will be never.

My Lords, my noble friend is very kindly further exposing my ignorance on this matter because I cannot produce the answer in quantitative terms. However, the House will appreciate that criticism of the regulatory regime, to which the Parliamentary Ombudsman gave voice, covered the decade before 2000, and during seven of those 10 years the other side formed the Administration.

My Lords, I speak as someone who has read the report. With regard to the Government’s response and to those of us who were practising in the early part of that period, is the Minister aware that that there was a big difference between the responsibilities of the Department of Trade and Industry and the management at that time, and those of the later period, when the FSA was the authority involved?

My Lords, the noble Lord knows these matters well and, as he indicated, followed the report carefully. The issues relating to responsibility are complex. We had the report from Lord Penrose prior to the ombudsman’s examination and he indicated the number of organisations that had been remiss. However, the House may recall that his overwhelming concern was that Equitable Life had brought the financial crisis upon itself.

My Lords, the ombudsman described the Equitable saga as a “decade of regulatory failure”, but has there not also been a decade of stonewalling by one after another of the government departments concerned, with the same officials in fact moving from one department to another? Following a period when the Government have done everything possible, as indeed the ombudsman’s predecessor did, not to reach a conclusion on this matter, should we not have a rapid decision on it? Should we not in fact have a debate on the matter before the Government take a view, as the ombudsman recommended?

My Lords, these are complex issues. I agree with the noble Lord that it is now important for the Government to respond to the clearly defined ombudsman’s report. We intend to do so and to put an end to what he regards as stonewalling but, as I reflected, merely relates to the complexity of the issues concerned.