The chief executive of Equitable Life made a last-ditch bid yesterday to persuade ministers to honour a manifesto commitment to fully compensate victims of the collapse of the life insurer.
Chris Wicarson wants the Government to pay as much as £5bn but an official report by a retired judge Sir John Chadwick, commissioned by the last government, recommended paying between £400m and £500m.
Mr Wicarson and Equitable's board have written to Mark Hoban, the Financial Secretary to the Treasury, to urge the Coalition Government "to implement the full Parliamentary Ombudsman's recommendation to make fair and transparent payments to Equitable Life policyholders".
He said: "We understand the financial situation. But Government departments are being asked for cuts of 25 per cent. If ministers follow the Chadwick recommendations, it would be 90 per cent. The fact is that this should really have been dealt with years ago when there wasn't an issue."
Mr Wicarson said he was "disturbed" that MPs had been sent a lengthy briefing ahead of a parliamentary debate next week that did not mention the ombudman's recommendations for payments. Mr Hoban's decision is expected next month.
Paul Weir, a spokesman for the Equitable Members' Action Group, said: "The Government should respect the Parliamentary Ombudsman's recommendations. It should dispose of the work of Sir John Chadwick, which we think is disgraceful. They should pay proper compensation, not peanuts."
Equitable was plunged into crisis in 2000 after it lost a court battle over guaranteed pensions. Subsequent reports have sharply criticised a lack of effective regulatory supervision of the society culminating in the Parliamentary Ombudsman, Ann Abraham, recommending that the Government compensate policyholders who have collectively lost millions. She memorably described Sir John's report as "unsafe and unsound". The actress Honor Blackman has been a high-profile recruit to the policyholders' energetic campaign for compensation.