MP says "more must be done" for Equitable Life policyholders
Arundel & South Downs MP Nick Herbert has called on the Government to “bring closure” to the claims of Equitable Life policyholders and compensate them fairly for their losses.
In a debate on Equitable Life in the Commons on Thursday 26 February Mr Herbert said that more needed to be done to resolve the issue of compensation and that “the Government have a duty” to accept responsibility for the regulatory failure which saw thousands of investors lose substantial savings in the 1990s.
A report in 2008 by the Parliamentary Ombudsman identified maladministration as a contributory cause for the failure of Equitable Life, following which the Coalition Government legislated to compensate policy holders. Despite austerity measures, £1.5 billion in compensation was provided, equivalent to over a fifth of the average claim.
However, policyholders believe that this sum was insufficient and that they are owed the balance of their claim. Mr Herbert met a group of Equitable Life policyholders in his constituency last October to discuss the ongoing situation and to affirm his support for their cause.
Speaking in the debate, Mr Herbert said that this issue was important to a large number of his constituents and that they “remain gravely concerned that, although in many cases they have been partially compensated for their loss, they have not been fully compensated or compensated at a level that they believe to be just.” He also highlighted the fact that policyholders had in no sense behaved irresponsibly, and had suffered significant losses through no fault of their own.
He said that, since the Ombudsman’s report had identified maladministration, the Government needed to accept accountability, “because when institutions for which the Government are responsible fail, the Government must accept responsibility.”
While he recognised that the Government had set up the compensation scheme and that they had to address the fiscal environment responsibly, he said that there was a perceived unfairness, because while shareholders in banks had received compensation and redress, those who relied on the effective regulation of Equitable Life when they invested in it “in good faith” were not receiving full compensation.
Mr Herbert said that because the Government has accepted responsibility for compensating investors, it remains “a continuing source of concern that such a small proportion of many of my constituents’ losses have been addressed.” The MP emphasised the need for finality in this situation and called the ongoing uncertainty of whether there will be any further compensation “deeply unsatisfactory”.
He said that “closure may not be for a 100 per cent of the losses accrued” but that it seemed that compensation of only 22 per cent was inadequate. He was clear that the Government have a duty of accountability and good governance.
The backbench MPs' motion calling on the Government to make a commitment to provide full compensation during the lifetime of the next Parliament, as the economy and public finances continue to recover, was passed without a division.
However, the Economic Secretary to the Treasury, Andrea Leadsom MP, told MPs that there was a long way to go to restore the public finances, and that the public purse remained very constrained. She said: "It is right that we have taken action on the Equitable issue, but we must balance this with the need to continue to address the difficult position of the public finances and the impact on fairness to all taxpayers. That is why this Government have no plans to change the funding available to the payment scheme.
"Our focus is rather to complete the small number of remaining payments. We have continued to make excellent progress with the scheme itself. Only this week I was pleased to report that over £1 billion has been paid to nearly 900,000 eligible policyholders."
- To read the Commons debate see