§ The Financial Secretary to the Treasury (Ruth Kelly)
The Government appreciate the genuine difficulties that many of Equitable Life's current and former customers face.
The Government recognise the importance of events at Equitable Life. That is why we set up an independent inquiry under Lord Penrose. Our main concern is to ensure that the lessons arising from this situation are learned. That will allow both regulators and the industry to develop the tools that they need to avoid similar incidents in future.
§ Norman Lamb
I declare an interest as a former policyholder and apologise for not making that clear on the Order Paper. Is not it outrageous that the Penrose inquiry has started interviewing witnesses only this week? What hope is there for the hundreds of thousands of affected people when we have a dog's dinner of four inquiries? They are being conducted by Penrose, the parliamentary ombudsman, the financial ombudsman service and the complaints commissioner for the 427 Financial Services Authority. What are the Government doing to co-ordinate that to provide some hope of an outcome for all those affected?
§ Ruth Kelly
I must correct the hon. Gentleman's understanding. One full independent judicial inquiry is being conducted into Equitable Life. The other inquiries to which he refers result from independent decisions made elsewhere. They are of interest but not direct concern to the Government. The Penrose inquiry covers 50 years and examines not only the regulator's actions but those of Equitable Life. Lord Penrose made it clear that he is keen to proceed as quickly as possible, consistent with providing a thorough and authoritative account of the relevant period.
§ Mr. Barry Gardiner (Brent, North)
I welcome the fact that the inquiry is under way, as will many people, but does my hon. Friend understand the anger and frustration felt by many of the policyholders at the fact that the market value adjusters that have been put on, taken off—with assurances that nothing further would happen—then put back on again, stems from the decision of the chairman and the chief executive to say to the public and to their policyholders that the funds would sustain their profitability in the long term even though there were no new policyholder entrants? Does she agree that that was a fundamental error in their assessment of how to take the company forward?
§ Ruth Kelly
I certainly understand and sympathise with the distress felt by the policyholders at Equitable Life. The company has made it clear that it considers itself to be solvent, but it has also pointed out to its policyholders and the regulators that there are fundamental uncertainties associated with its accounts. I believe that policyholders recognise, particularly in the light of the difficulties and uncertainties reflected in the global stock market at the moment, that they are not alone in experiencing either exit penalties or cuts in bonus payments. Of course, that does not make it easier for them, but at least it puts the matter into some sort of context.
§ Mr. Stephen O'Brien (Eddisbury)
It is not sympathy that the Equitable Life policyholders and those with annuities want, it is action. On 12 December, the Minister told the House that Lord Penrose hadbegun a programme of witness interviews."—[Official Report, 12 December 2002; Vol. 396, c. 388.]Yet, in another place on Tuesday, Lord McIntosh said:The inquiry started to interview individual witnesses only yesterday."—[Official Report, House of Lords, 21 January 2003; Vol. 643, c. 554.]Those answers cannot both be right. Which Minister misled which House?
§ Ruth Kelly
The conduct of the inquiry is clearly a matter for Lord Penrose himself. When I made the comments to which the hon. Gentleman refers, that was the information that Lord Penrose had made available to the Treasury. It is clearly an independent inquiry, and 428 I think that policyholders expect a thorough, independent inquiry to be carried out and that all the lessons that can be learned are indeed learned.
§ Mr. Harry Barnes (North-East Derbyshire)
This involves not only the Financial Services Authority, the parliamentary ombudsman and Lord Penrose; it also involves the Exchequer. The policyholders require a sign that action will be taken to defend their interests, that the Treasury is not just waiting for Penrose, and that something is going to be achieved.
§ Ruth Kelly
It was clearly an important decision to set up a full, independent judicial inquiry to consider all the circumstances that led to the situation at Equitable Life. Lord Penrose has said that he will not hesitate to allocate blame where blame is necessary. We set up the inquiry to learn all the lessons that we can, so that this situation does not recur. Action is being taken and it will be seen to be taken.