Equitable Life investors will start to receive compensation from the end of next month, the Government said yesterday. Some £775m will be paid out to about 945,000 policyholders, while £620m will be shared among 37,000 with-profits annuitants.
However, payments will be spread over five years, which prompted anger from victims of the scandal. Paul Braithwaite, the general secretary of the Equitable Members Action Group, said: "It's taken the Government 10 months to come out with a penny-pinching payment scheme to be eked out over the next five years – why can't the victims, who've already waited a decade, be paid out their due this year?"
He warned that many more annuitants will die before they receive the compensation they are due. The Treasury said all policyholders due a payment would receive a letter before June 2012 telling them how much they will get and approximately when they will receive it. However, those not due anything will not be contacted at all. That includes some 100,000 policyholders whose losses were less than £10, which will be sucked up in administrative costs.
Mark Hoban, the financial secretary to the Treasury, said the payment scheme had been designed "to reflect the principles of fairness, transparency and simplicity". He claimed: "When payments start in the middle of this year, it will be a huge milestone for the policyholders who have waited so many years for the resolution of this matter."
But Mr Braithwaite, whose group has campaigned for more than 11 years for justice for Equitable Life victims, said most of the 950,000 non-pensioner victims "will be stunned when they see how low the Treasury has calculated their losses to be, and further outraged when they see that figure is slashed by about 80 per cent".
The Government has admitted that policyholders suffered "relative losses" of £4.1bn, but decided it could not afford to repay that amount. Only annuity holders will be compensated in full; payments to other investors will amount to less than a quarter of the amount they lost. However, all compensation will be tax-free.