Policyholders of Equitable Life were yesterday raising their hopes that the Government might consider some form of compensation, as the all-important Penrose report into the group's downfall hit another delay.
Peter Hain MP, the leader of the House of Commons, acknowledged at the end of last week that the report was "crucial" to the many thousands of policyholders that have suffered losses on their savings. He said: "It is a complex matter, especially if the question of compensation arises - we would rather take a little time to do that than rush into it prematurely. I know that people are anxious for this to be dealt with as a matter of urgency, and having noted that anxiety, the financial secretary will no doubt want to act on it."
The Government has consistently rebutted any calls for compensation and that it now appears willing to even consider redress has ignited the hopes of policyholders who were caught out when Equitable closed to new business in 2000. The company had a £1.5bn hole in its finances and since then, policyholders have seen their pension funds slashed. Liz Kwantes, spokeswoman for a number of policyholder action groups, said: "I was very surprised to hear these comments. It shows that compensation is in the Government's thinking."
Pressure on the Government is certainly stepping up ahead of the Penrose report, which looks set to criticise the Treasury and the Department of Trade for failing to supervise the company.
Publication of the report had been expected by the end of January, but it now looks set to be the end of this month before the Treasury goes public. This delay is being put down to the report's damaging findings. "Maxwellisation has been completed, the legal questions have been sorted out, so what is the Treasury doing with it?" one industry source said.
The board of Equitable Life and its policyholders believe the report will force the Government into compensation. "If Penrose gives us the ammunition to pursue the Government, then we will do so.
"It is our belief that there is a strong moral case to answer," Charles Thomson, the chief executive of Equitable, said.
But the compensation hopes could well turn out to be false as the Treasury sought to distance itself from Mr Hain's comments. A spokesman said: "The Government's position has not changed. We will consider the findings of the report."Reuse content