Lord Neill, the former chairman of the committee on standards in public life, will tell a European Parliament committee of inquiry in Brussels today that Equitable Life policyholders who complained to the Financial Ombudsman Service have felt "an abiding and entirely justifiable sense of disillusionment, frustration and injustice."
The eminent barrister and Oxford academic (Lord Neill of Blayden QC) has spent several months investigating over 30 complaints to the ombudsman after being commissioned by the Equitable Members Action Group (Emag) to produce a report for the inquiry.
He was asked to "review whether policyholders could conclude that the service provided by the FOS has fallen short of the standards which the policyholders were entitled to expect", and his 250-page analysis says complainants "could reasonably conclude" that it did fall short of its advertised standards.
He says: "The impression gained by the complainants whose cases I have studied is that the FOS is not a body which holds the scales of justice evenly. It is a body which in many ways and in many instances has displayed partiality towards the financial firm, in this case EL.
"Many of the case studies reveal attitudes on the part of FOS officials which the complainants felt were unhelpful, unnecessarily argumentative, or even aggressive."
Policyholders whose complaints were founded on Lord Penrose's 800-page report into Equitable in 2003, which established systematic over-bonusing' by Equitable during the 1990s, had their cases dismissed.
Neill says: "Policyholders who had Penrose-related claims had good reason to be dismayed by the Chief Ombudsman's dismissal of their claims without considering their merits, both as regards the process by which he reached his decision and as to its content."
The report goes on: "The complainants did not expect to be treated with any special favour but they did believe the FOS would be sensitive to the fact that they had suffered serious financial loss, and to the point that in nearly every case they were without any legal assistance.
"Complainants lost confidence in the system and began to feel the FOS was stalling. At worst the officials were seen as advocates for EL."
The report says that even where complainants have apparently succeeded in establishing liability on the part of the insurer, they have been "dismayed by the difficulties confronting them in ascertaining the amount of damages which they are entitled to claim the attitude of detachment to this issue on the part of the FOS has led to repeated and strong protests."
Neill writes of "a general feeling of outrage among complainants that Penrose-related complaints were not allowed to remain with the FOS for adjudication."
Although in March 2004 a government minister had suggested the ombudsman was the correct remedy, the FSA appears to have decided otherwise.
An internal Treasury e-mail uncovered by Emag from June 2004 refers to the FSA staging meetings to "provide the FOS with a basis for considering complaints" .
Paul Braithwaite, secretary of Emag, said the report was "a devastating indictment".
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