I, too, congratulate Dr. Cable on securing this important debate. The number of hon. Members attending the debate shows the importance that we attach to the debacle that is the Equitable Life saga. I want to declare an interest, although I am not entirely sure whether I am any longer required to do so, because I did have an Equitable Life pension plan, but I recently transferred its dwindling value to another pension fund.
Many of my constituents, however, remain policyholders with Equitable Life. Their bonuses have been eliminated, their policies have been substantially reduced in value and they are facing an extremely uncertain retirement. The key fact that my constituents want to know is whether there was a regulatory failure. If there was, that would constitute a failure by the Government, because the DTI was the previous regulator, followed by the Treasury, and now the regulator is the FSA. Furthermore, if there was a regulatory failure, are my constituents entitled to compensation as a result?
My constituents are also extremely unhappy about the way in which the investigation is being carried out. As the hon. Member for Twickenham mentioned, the inquiry by the parliamentary ombudsman into the complaints that have been raised has been put on hold pending the outcome of the inquiry set up by Lord Penrose. My constituents are dismayed by the continuing delay in the reporting of that inquiry, and I hope that the Minister will shed some light this morning on what on earth is happening. Will the Minister give us a ballpark estimate of when we may expect the inquiry to report? I understand that the report will be submitted to the Treasury, but will she also say whether the full report will be made public? Equitable Life policyholders have a direct interest in knowing whether they will be able to see and consider the report, when they have had to wait for so many years for any action to be taken.
I should also like to comment on the remit of the parliamentary ombudsman. I do not want to revisit history and cover the background to the decision regarding the period from January 1999 to December 2000, but I understand that there have recently been calls for the Government to consider whether the remit is too narrowly drawn, in the light of the regulatory history of Equitable Life.
I should also like to say something about the role of the prudential regulator. A regulator is not subject to some sort of best efforts standard. A regulator in the financial services industry is subject to various legal requirements. Have those legal requirements been met? It is not totally clear on what basis Equitable Life has been authorised, in terms of how the EC law regime applies to it. Either it falls within direct EC single-market financial services directives or it falls within the general EC treaty regime. In either case there are implications for the United Kingdom Government as regulator. Will the Minister tell us her understanding of the implications for Equitable Life of EC financial services law? I suspect that that angle has been overlooked, and therein lie potential remedies for policyholders who feel that the Government, as prime regulator, have not properly protected their interests.
As to recent developments, I wonder how long Equitable Life will be allowed to continue to trade when it is failing to meet the solvency requirements that are legally incumbent upon it. Presumably, the fact that it can continue to trade although it is not currently meeting some solvency requirements means that it has a transitional exceptional derogation from the general rules. However, by definition, a transitional exceptional derogation cannot go on ad infinitum. What will the Financial Services Authority be required to do should Equitable Life continue to be in breach of the solvency rules applicable to it in the medium to longer term?
The situation is getting worse daily and is deeply damaging to the reputation of UK-authorised financial institutions, including, as Mr. Lazarowicz said, the excellent Scottish-based institutions in major cities in Scotland. It is in no one's interests for this debacle to drag on and on and for the Government to allow it do so. I hope that the Minister will reply to the questions that I and other hon. Members have asked in the debate because our constituents want answers to those questions.
With respect to Government policy, I wonder how the Government handling of this matter squares with their stated objective of encouraging people to plan for their retirement. Is there not a danger that the longer the situation drags on, the less attractive it will be to take out a pension? That cannot be in the Government's interests as it would defeat their approach to pensions policy.