Victims of the near-collapse of Equitable Life yesterday reacted with outrage after a government report suggested they should only receive a fraction of the compensation for which they have spent a decade fighting.
The report by former judge Sir John Chadwick, commissioned by the previous government, proposed a total payout of just £500m, roughly 10 per cent of what has been estimated as policyholders' total losses.
Treasury minister Mark Hoban pledged to reveal the Government's final decision on how much they can expect in October, with payments due to begin in 2011. While he said Sir John's report was "just one of the building blocks in resolving what is a complex matter", Mr Hoban warned that any scheme "will need to take the potential impact on the public purse into account".
The actress Honor Blackman, who has campaigned on behalf of the scandal's victims,said: "I'm absolutely furious. We've been stitched up again. The Government admits that we have lost about £5bn. And yet they propose to give us less than 10 per cent of that.
"This is not what we voted for when both Tories and the LibDems promised to do the right thing. We have been deceived. How can I tell my children that it is sensible to save for their retirement when this is what happens to those who do?" Paul Weir, spokesman for the Equitable Members Action Group, said: "This is even worse than we were predicting – it's a complete outrage. The Parliamentary Ombudsman isn't happy, the victims aren't happy and MPs won't be happy either. Three hundred and eighty MPs signed the EMAG pledge for fair compensation – a 90 per cent cut is not what they signed up to.
"The twisted logic of Sir John Chadwick beggars belief. If the regulators had warned me that Equitable was unsafe in 1992, I wouldn't have put my pension there, simple as that. His report does what we always warned it would – provide an excuse to cut the compensation to shreds."
The campaigners reasoning appear to have been backed yesterday by Parliamentary Ombudsman Ann Abraham, who recommended payments as a result of what she called "serial regulatory failure" in the way Equitable had been overseen.
In a statement, the Ombudsman said: "While the Ombudsman would welcome the delivery of justice to those affected by the Equitable Life affair in a speedy, simple and transparent manner, it is not clear from the material presented to Parliament today whether such justice will be delivered. Once the Ombudsman has had time to consider the material presented to Parliament today, she will inform Parliament of her views."
Around a million people lost money through the Equitable debacle, which saw the mutual insurer teeter on the brink of collapse after a court ruled it must honour in full guarantees offered to holders of so called "guaranteed annuity" pension plans.
With virtually no reserves to fall back on the society was forced to close its doors to new business and slash payments to its policyholders.
The insurer itself said the £4.8bn estimation of the total loss itself should be used as the basis for calculating compensation. Chris Wiscarson, Equitable Life's chief executive, said: "More has been achieved in eight weeks than in the previous eight years. The timetable, the transparency and the total amount stated for relative loss of over £4bn at last represent a proper basis for doing right by Equitable policyholders."Reuse content