Equitable Life victims win legal battle against government

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The Independent Online

Hundreds of thousands of victims of the Equitable Life scandal may be in line for government compensation after all, following a High Court ruling against the Treasury yesterday.

Two senior judges said the Treasury had acted unlawfully earlier this year in rejecting many of the findings of the Parliamentary Ombudsman, Ann Abraham, who had ruled that as regulatory failures and official maladministration had played a significant role in the failure of Equitable in 2000, up to a million victims whose savings were depleted should receive compensation.

The Treasury's decision to disregard many of Ms Abraham's conclusions enabled it to instruct Sir John Chadwick, a retired judge, to devise instead a compensation package within very limited guidelines. The Equitable Members Action Group (Emag), which brought the case yesterday, has previously warned that up to 90 per cent of the victims would miss out under the remit given to Sir John.

Lord Justice Carnwath and Mr Justice Gross said the Government's response to Ms Abraham's report "lacked cogency" and gave the Treasury 21 days to respond and outline the action it now expects to take.

The Treasury said it had won a "substantial part" of the case – notably the right for Parliament to devise how a compensation scheme should operate – though the two judges described Emag as "the substantial victors".

The ruling opens the door to compensation to hundreds of thousands of Equitable policyholders who would not previously have been eligible for a pay-out. The payments may also be higher, because the ruling extends the period for which savers should be compensated further back into the Nineties than the Government had envisaged.

"This is a triumph for Equitable's long-suffering victims," said Paul Braithwaite, general secretary of Emag. "If Emag's members had not paid for this legal action, there's little doubt that, despite the Ombudsman's recommendations for substantial compensation, the Government would have got away with limiting payments to a small number of Equitable's victims ."

Dinah Rose QC, the barrister acting for Emag, added: "We say the Government is not entitled to evade reality, which is that it is responsible for falling very seriously below acceptable standards of administration, and people are entitled to compensation as a result."

The action group now plans to take its case directly to Parliament, with a protest march next month. It will unveil a stack of 15 coffins, representing the 15 policyholders who it says are now dying each day without having been compensated for their losses.

Vince Cable, the Liberal Democrats' Treasury spokesman, last night promised to take up the case. "Since 2000, at least 30,000 people have died waiting to receive the compensation to which they are entitled," he said.