Ombudsman's report builds on Lord Penrose's catalogue of errors at Equitable Life

The Parliamentary Ombudsman's report into the government's failings to properly monitor Equitable Life through its regulators builds on the 2004 Penrose report which identified the shortcomings of the mutual itself.

In 2001 the Government announced it was launching a full investigation into the circumstances leading up to the downfall of Equitable Life, headed up by Lord Penrose.

Commissioned by the Treasury, it concluded Equitable Life "was the author of its own misfortunes" caused primarily by deep-seated management problems dating back to as early as the 1980s.

Lord Penrose stated: "The deficiencies are not so obvious as some are inclined (or wish) to believe. And ... it is not enough in this case, to infer from the coincidence of systems deficiencies and loss that one caused or contributed to the other."

He stressed that he examined the regulators with the benefit of hindsight and that they were operating under a system different in its approach, resources and values from that applying in 2004

Lord Penrose made no recommendation for the payment of compensation.

Icki Iqbal, a retired actuary and former director of Deloitte and Touche, said: "The Penrose report was looking at the society and this report is about the regulatory failures.

"One of the big issues [with Equitable] was when it lost the House of Lords judgement, however that was not the only problem with the society, but that tipped the balance [against its favour]."

The latest report by the Ann Abraham, Parliamentary Ombudsman, was commissioned by parliament and recommends that policyholders be compensated.