---

Equitable Life

The right hon. Gentleman is right about what the ombudsman said, and I agree that the Government should take that into account in implementing the ombudsman's recommendations. The case for compensation is straightforward. The maladministration by the regulator was a direct cause of the injustice suffered by policyholders. The regulator was a Government responsibility, so the Government should accept the ombudsman's recommendations to establish a compensation scheme to pay those who suffered the injustice. That injustice was caused by the failure of public bodies. The aim of such a scheme should be to put those who suffered a loss back into the position that they would have been in had the regulator's maladministration not occurred. The ombudsman said that it would be reasonable to expect a compensation scheme to be established within six months of any decision by the Government and Parliament to establish such a scheme. Given the advanced age of many of the policyholders, it is important that the Government and Parliament should aim to meet that timetable. However, the remit that the Government gave to Sir John Chadwick is utterly inadequate. It is greatly restrained by the fact that Sir John is allowed to take into account only those recommendations that the Government accepted. I believe that that breaks the link in the chain between maladministration, injustice and compensation.