Equitable Life policyholders promised fair and transparent payment

Last week, the Queen's speech announced an Equitable Life Bill to make "fair and transparent payments" to Equitable Life policyholders who suffered losses as a result of regulatory failure.  HM Treasury says it is committed to making payments "as quickly as possible" and intends to introduce the Bill in the first session of Parliament.

Equitable Life closed its with-profits fund to new business in December 2000 after a series of disastrous management decisions caused the near-collapse of the UK's oldest mutual life assurance company.

In July 2008, Parliamentary Ombudsman Ann Abraham identified 10 instances of maladministration in the way Equitable Life had been supervised by the authorities in the years leading up to the crisis and concluded that in six of those cases the maladministration had resulted in injustice.

She recommended that the public bodies concerned apologise for these regulatory failures and that the Government set up an independent compensation scheme to assess individual policyholder's claims

In January 2009, the Labour Government accepted some findings of maladministration and injustice but rejected others. And instead of an independent compensation fund, it proposed an alternative scheme that would make discretionary payments to individuals who had suffered a "disproportionate impact" attributable to those instances of maladministration it accepted took place.

Sir John Chadwick, a former Lord Justice of the Court of Appeal, was appointed to advise on the scheme and identify those losses attributable to maladministration, as opposed to losses caused by market conditions or the actions of Equitable Life itself. His final report is due in mid-July.

"Once the Government and independent commission has considered Sir John’s final report along with other relevant information, we will be able to provide more detail about the payment scheme," the HM Treasury website states. "Establishing a payment scheme of this kind is not straightforward, however we appreciate that policyholders have had an extremely long wait and we are committed to making payments as quickly as is possible."

The Treasury has also confirmed two key points of the scheme: that there will be no means testing of policyholders and that the families of policyholders who have died waiting for compensation will be included.

Financial Secretary to the Treasury, Mark Hoban MP, said Equitable Life policyholders had been fighting for a just resolution for over a decade.

"I am very aware of the acute concern among policyholders who have suffered loss, and the desire to achieve redress quickly. While there will be frustration at this short delay, it is important that our approach is thorough and fair," said Hoban. "The Government is working hard to address the situation as quickly as possible so that we can establish an independently designed payment scheme for Equitable Life policyholders that is swift, simple, transparent and fair, as recommended by the Parliamentary Ombudsman."

Parliamentary Ombudsman Ann Abraham said: "This announcement is welcome news for me, but more importantly, for the thousands of individuals and families who are still enduring financial hardship as a result of the regulatory failure identified in my 2008 report."

"I hope that the new Government will move quickly to establish a compensation scheme that is independent, transparent and simple to administer and that will serve to overturn the injustice that Equitable’s policy holders have suffered," she said.