SIB wants guarantees for pension victims

The Securities and Investments Board, the City's senior watchdog, is poised to embrace a new scheme aimed at "guaranteeing" redress to victims of the pensions mis-selling scandal. SIB's move comes as another regulator's confidential report, seen by The Independent, shows insurers are still failing to compensate those worst affected.

The leaked document from the Personal Investment Authority, the companies' front-line regulator, shows some of the UK's biggest insurers, including TSB Life, Royal Life, Pearl, Sun Alliance, Friends Provident, London & Manchester and Britannic, have yet to settle as little as 10 per cent of their most urgent cases.

The leaked report will be a further blow to the PIA, which staked its credibility on resolving the problem after a report last year revealed almost no compensation had been paid at that time.

Helen Liddell, Treasury Minister, has indicated her willingness to by- pass regulators by summoning the worst-offending insurance firms to a meeting tomorrow. Company chiefs will be told by Mrs Liddell that unless they speed up the review process they may face tough sanctions, including fines, over their failure to comply.

The latest PIA document includes sets of tables, revealing progress to date. One of the tables, dated 3 April, is believed to show the picture in the months prior to that date. Newer figures indicate that some companies, most notably Equitable Life, Norwich Union and Royal London, have made some progress.

It is believed that the inability of most firms to proceed with the review at speed will lead Sir Andrew Large, outgoing chairman at SIB, to publicly back later today redress "guarantees" as a view of resolving the matter.

The "guarantee" system, championed by Legal & General, would promise those who were mis-sold a pension that the insurer would match every benefit they would otherwise have been entitled to even if they could not rejoin their old scheme.

PIA executives have rejected this option, claiming it is unworkable. However, SIB has never hidden its sympathy for the proposal, which Sir Andrew hopes will break the compensation log-jam. It is thought among the first to offer this system to its policyholders could be Prudential.

The extent of the shambles involved in the compensation process is outlined in the PIA document, which details the experience of one company, Britannic, in the review process.

Britannic, a Birmingham-based company which employs 2,300 sales staff, was visited by a PIA monitoring team in January. The team found that letters from Britannic policyholders were not being acknowledged, reminders to take part in the review were not being sent out and people were being excluded from the review for no proper reason.

Brian Shaw, chief executive at Britannic, said: "We have increased our commitment in the past months and are in line with other providers in terms of what we have achieved to date."