15 January 2009 / by Rachel Mason
Savers who lost money – half their life savings in some cases – when Equitable Life failed in 2000, will be told later today how the Government plans to compensate them.
More than a million people lost out when Equitable Life near-collapsed nine years ago following a House of Lords ruling that it must meet its financial commitments to customers who had bought guaranteed annuities.
The firm – Europe’s oldest insurer – was left facing liabilities of £1.5 billion and was forced to shut its doors to new business.
Savers saw the value of their savings and private pensions slashed by £4billlion.
Although there were clear failings within the firm itself, a report into what official regulatory bodies could have done to prevent the debacle was carried out by the Parliamentary Ombudsman Ann Abraham and in July 2008, she revealed that maladministration was partly to blame.
She called on the Government to apologise to policyholders and said an independent compensation scheme should be established for those who lost money and have faced nearly a decade of uncertainty.
Yesterday, it was reported that the Treasury had responded to Ms Abraham’s report and admitted that regulatory failures were partly to blame for the insurance firm’s demise, and that compensation must therefore be paid.
Later today, Yvette Cooper, Chief Secretary to the Treasury, will announce an ‘independent tribunal’, but for the victims, this is just not good enough.
Paul Braithwaite is General Secretary of the Equitable Members Action Group (Emag) – an independent group for current and former Equitable Life policyholders that is funded by contributions.
He says that a tribunal will simply mean policyholders who have already waited nearly nine years for compensation will have to wait even longer to get their money back.
“The risk of a tribunal is that we will face further delays for what is now a terribly overdue necessity,” he said. “We are not seeking charity, this is about a right to justice.”
Mr Braithwaite also claims that the Treasury is trying to orchestrate a “compensation-lite” scheme and says that Emag will demand a say over who chairs the tribunal.
Speaking to the Telegraph, he said: “I think it is moderately obscene that the Treasury, which was the subject of some of the ten findings of maladministration over Equitable Life, should still be seeking to orchestrate compensation lite for policyholders.
“It is not the prerogative of the party found to be guilty to take the decision over compensation; it is for Parliament.”
© Fair Investment Company Ltd