UK - Ann Abrahams, the Parliamentary Ombudsman, is considering whether to submit a follow-up report on Equitable Life detailing why she finds the government response to her report "unsatisfactory".

Abrahams told a committee of MPs in evidence to the Public Administration Select Committee (PASC), at the re-opening of its inquiry into issues surrounding the near collapse of the insurer in 2000, she believed the tone of the government's response, published in January, was respectful, though said she was "not sure the content is respectful".

The PASC originally conducted an inquiry into the findings of Abrahams' report at the end of last year, after it was published in July 2008, in which she made 10 findings of maladministration against the prudential regulators of Equitable Life and the Government Actuary's Department (GAD), and recommended a government-funded compensation scheme for the losses suffered by policyholders.

The committee has now reopened the inquiry following the government's response - in which it only partially accepted the findings of maladministration and injustice, and rejected the idea of a compensation scheme in favour of ex-gratia payments to those who suffered disproportionate impact.

In her evidence session the Parliamentary Ombudsman raised a number of issues with the report, in particular the government's rejection of findings, and suggested there were no cogent reasons for doing so, as she said the report is "strong on assertion but short on facts".

Abrahams told the committee: "Overall, this is an unsatisfactory response and I am disappointed to see the government picking over and reinterpreting the analysis".

She also argued the alternative proposals for compensating the policyholders affected by the issue "has a number of issues in it to be resolved", including no detailed timetable, no definition of what is considered 'disproportionate impact', and the requirement for Sir John Chadwick to assess what proportion of the losses were caused by Equitable Life rather than the regulators. (See earlier IPE article: Gov't offers Eq Life apology but limits compensation)

Abrahams argued the idea of "assigning culpability" is a "red herring" as she told the committee none of the injustice she found could be attributed to Equitable Life and its advisers, given this was not the subject of her report.

The Ombudsman also told MPs the arguments put forward by the government were based on a "flawed approach" as she claimed in some cases the response had re-presented the findings as something not said by the Ombudsman and then disagreed with it.

She admitted in terms of the investigation and findings "our job is done", but added  she is now reflecting whether to submit to parliament a "short follow-up report" providing details of why she finds the government's response "unsatisfactory" as she thinks "it does now appear that the injustice will not be remedied".

Meanwhile, in a later evidence session Charles Thomson, chief executive of Equitable Life, told MPs the government report is "wholly inadequate" and should not be accepted by parliament, as it is not believed it would end in a "fair result".

He said the insurer could not support any type of "means-testing" in a compensation scheme which is meant to "right a wrong", and noted with no timetable for the establishment of the ex-gratia payment system it could lead to further delays for policyholders.

Thomson said: "We struggle to find the reasoning behind the creation of the scheme. I think the Treasury would be wise to consider a different approach."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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