The Government finally offered an apology yesterday for its mishandling of the regulation of Equitable Life, but was attacked after failing to say when it would provide compensation for some of the thousands of policyholders who lost out as a result of itscollapse, or how much.
Speaking to the House of Commons yesterday, the chief secretary to the Treasury, Yvette Cooper, conceded that the Government had been guilty of maladministration during the 1990s and the early part of the current decade, and would now look to compensate those who had been "disproportionately" affected by the insurer's demise.
"I think the whole House regrets the mismanagement of the Society that caused problems," she said. "And I wish to apologise to policyholders 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."
The apology and promise of compensation comes more than eight years after Equitable's collapse – during which time more than 30,000 of those who might have qualified for financial support have died.
Ms Cooper said the Government had appointed the Lord Justice of the Court of Appeal, Sir John Chadwick, to consider what proportion of policyholders' losses were incurred as aresult of maladministration.
Once Sir John's report has been finished, Ms Cooper said, the Government would set up a scheme to make payments to those who had lost out.
But she stressed that the state of the public finances would have to be taken into consideration when deciding on the size of the payments, and to whom they should be paid.
Policyholders angrily criticised the Government's proposals, pointing out that thousands more people would now die before being compensated.
Paul Braithwaite, general secretary of the Equitable Members' Action Group (EMAG), said: "EMAG is appalled to see that after eight years of delay and dissembling the Government has kicked the issue of compensation for proven injustice into the long grass yet again. This cynical manoeuvre will ensure that many more pensioners die without obtaining the fair redress that the Parliamentary Ombudsman called for.
Referring to the Financial Services Authority, Braithwaite said, "The Government's statement shows that the words 'Regulated by the FSA' on your pension policy are a worthless fantasy. Buyer beware: there is no protection for pensioners in the UK. It's no wonder there's no trust. In our view, 100 per cent failure should demand 100 per cent compensation – not a discretionary handout."
The Conservative Party also criticised the Government, saying it was ignoring the recommendations of both the Parliamentary Ombudsman and the Public Affairs Select Committee in its approach to paying compensation.
"We welcome the fact that the Government has finally admitted failings and will compensate thevictims of the Equitable Life fiasco. But we are disappointed that the Government has torn up the Ombudsman's timetable for compensation, and there is no guarantee when policyholders will receive any payments for the losses they have suffered," said Mark Hoban, the shadow financial secretary.
Case study: "We will continue to fight"
Ann Berry, a 70-year old retired physiotherapist from Sussex, is still suffering from the collapse of Equitable Life eight years ago.
Back in 1998, she used all four of her personal pensions to buy a with-profits annuity with Equitable, which promised to pay her an annual income which would grow each year. After the Society's collapse, however, her income collapsed – and she now estimates that she is receiving around 50 per cent less every year than she would have done had the insurer not hit the rocks. As a result of her much reduced pension she was recently forced to sell her home, buying a smaller and cheaper property which is not big enough to accommodate her family when they come to visit.
"I had to move into a small bungalow just so I could release enough capital from my property to live," she says. "I know that I'm lucky to have a house, but this is not what I thought I was signing up to when I bought my annuity with Equitable 10 years ago."
Ms Berry said she was very disappointed with yesterday's statement by the Government, and said she was still not convinced that she would see any compensation. "We're not going to give in," she said. "We'll continue to fight."