Policyholders who lost out when the insurer Equitable Life collapsed nine years ago yesterday launched a High Court challenge to the Government's plans to offer them only limited compensation. The Equitable Members Action Group (Emag) is seeking a judicial review of the Government's proposed compensation scheme.
The legal action is the latest stage in Equitable policyholders' nine-year battle for redress. After the insurer collapsed in 2000, the Government repeatedly refused to compensate victims despite a series of reports from the Parliamentary Ombudsman accusing it of at least 10 instances of maladministration in the way Equitable was supervised. Finally, in January, the Treasury announced it would compensate some of the victims. It has appointed Sir John Chadwick to advise ministers on how a scheme should operate, but said payouts will be discretionary and offered only to those "disproportionately affected".
The limited scope of the scheme enraged Equitable campaigners. "The continued intransigence has forced us to take legal action," said Paul Braithwaite of Emag. "The proposed scheme is totally inadequate, will take years to implement and looks like leaving 90 per cent of victims out in the cold."
The legal challenge is likely to win the support of many MPs. Last month, the cross-party Public Accounts Committee launched a withering attack on the Government's plans. "This may be a legally valid position but we think most people would consider it to be a morally unacceptable one," they said.