Simon Read: Equitable Life victims have every right to be angry

Click to follow
The Independent Online

Victims of the Equitable Life fiasco were given the old "good news, bad news" routine by the Government on Thursday. Treasury minister Mark Hoban, said a compensation scheme for people who lost cash in Equitable's with-profits scheme is finally being set. That's the good news.

The bad news? Compensation could be as low as £400m. That might sound a lot but members of the Equitable Members Action Group have been pressing for a £4bn to £5bn payout. The proposed payout could be as little as a tenth of what the victims think they deserve. In fact, the group estimates that the losses incurred by policyholders total £4.7bn.

Why is the compensation likely to be so much less? The lower figure was suggested by Mr Hoban following the publication of an independent report published on Thursday by retired judge Sir John Chadwick. He was commissioned by the last government to examine which policyholders had been hit hardest and what proportion of their losses could be attributed to maladministration.

Let's remind ourselves of what happened to Equitable: the company failed in 2000 because it did not have the funds to pay out the big bonuses and sky-high guaranteed annuity rates it promised its customers. It made the promises to attract investors but they were clearly made on sand and water. It seems to me that anyone duped into investing by these false promises should get compensation as soon as possible.

Sir John estimated that the "relative loss" of policyholders is between £4bn and £4.8bn. That's the difference between what they got from Equitable, and what they would have received if they had invested their cash with a rival.

But his report suggested victims should only receive a payout of between £400m and £500m. Why? Because Sir John speculated that most of the policyholders would have invested in Equitable irrespective of whether there had been any maladministration. Would they? I've no idea, but I think that's irrelevant to their compensation claims. It seems simple to me: if they are to be paid compensation, it should cover their losses.

Precise details of how much will be paid out is due to be revealed in October and the Government says it aims to begin making payments to policyholders in the middle of 2011. The delay adds further injury to Equitable Life victims. The action group points out that an average of around 15 Equitable investors have died every day while waiting for a decision. The previous government dragged its heels over the issue, meaning that in the decade since Equitable's collapse, some 50,000 policyholders have died. The Conservatives promised they would deal with the situation when they got into power but, as usual with politicians, they are dragging their heels and hiding behind red-tape and excuses not to get things sorted quickly.

Mr Hoban, for instance, said that the Chadwick report was "just one of the building blocks in resolving what is a complex matter". Building blocks? What is he on about? He went on to add that there are other judgments to be made in deciding the final shape of the compensation scheme.

That nonsense is unfair to the victims. They have waited almost a decade for justice and the new Government should stick to its promises and act quickly to put an end to the whole affair.



How Much do you reckon you fork out on bills each year? The average household has to find more than £18,500 a year to cover their regular bills, according to a study published this week by Confused.com. That means you could spend close to a million on bills in your working lifetime. Depressing thought, isn't it? But there are things you can do to drive down the cost of bills. The comparison sites want you to shop around for better deals and, while that can yield savings, actually cutting back on some luxuries can save a great deal more.

Do you really need that expensive mobile phone, for instance? The average person spends around £420 a year on their mobile phone, but using a pay-as-you-go and topping up a tenner at a time would cut the cost dramatically, as well as reducing the number of calls or texts you think you need to make. Who knows, if enough people take action it may even lead to a resurgence in good conversation.

And what about the Sky or cable television subscription? That adds a further £244 a year to the average household bill but these days you'll find a decent range of channels offered for free through the Freeview and Freesat services. Stick to them and you may be tempted to spend less time watching the box and get out and get some fresh air!

Rogue Traders come out in the summer sun, according to warnings from the Office of Fair Trading. They knock on doors offering to repair broken roof tiles or paving stones and then do a botched job, leaving homeowners facing even bigger bills to repair the damage. Consumer Direct says it received more than 5,300 complaints about traders offering home maintenance work on the doorstep last year, with complaints peaking in the summer months. In particular, they prey on the elderly who can be sucked in by smooth-talking traders and their wild claims about work that needs to be done urgently or even that the homeowner may be breaking the law if they don't do repair work at once.

There's nothing wrong – or illegal – with traders touting for business on doorsteps, but they often bully people into spending out on needless repairs. And then, even if they do the repairs, they can be shoddy or even make homes dangerous. The simple rule is not to sign anything on the doorstep or agree to on-the-spot repairs. If you have doubts, call Consumer Direct on 0845 404 0506 or visit www.consumerdirect.gov.uk/doorstepselling.

s.read@independent.co.uk

Looking for credit card or current account deals? Search here

Comments