Thursday, January 15, 2009

Partial Victory on Equitable Life

The government will compensate those policyholders "hardest hit" by the collapse of life insurer Equitable Life, the Treasury has announced.

Minister Yvette Cooper also apologised to the million-and-a-half policyholders who had lost money.

A former appeal court judge will advise the government on who will receive payment and how much.

Conservative MPs and campaigners, however, have said the scheme does not go far enough.

Liz Kwantes, of the Equitable Life Members Help Group, said she was worried about further delays.

"By the time they decide how to measure it, we've lost another year," she said.

"A lot of people have lost a lot of money. People have had a hard time - some have lost houses, their health has gone," she added.

Regulatory failure

More than eight years after the Equitable closed to new customers, the government has admitted that some regulatory bodies were partly to blame.

"We agree there has been maladministration in several areas and that government action is merited," said Ms Cooper.

"And I wish to apologise to policy holders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place," she told MPs.

This was highlighted in a critical report published last year by the Parliamentary Ombudsman, Ann Abraham, who called on the government to establish a compensation scheme.

It is thought that more than a million of the 1.5 million people who had Equitable polices in 2001 have seen the value of their investments slashed, in some cases by as much as 50%.

However, it is not yet clear who will be offered any money, or how much.

In addition, Yvette Cooper told MPs that any eventual payments would still have to "take account of the position of the public finances".

The Conservative view has been and remains that the Ombudsman's recommendation should be implemented in full.

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