Bill paves the way for Equitable Life payouts
Tuesday 25 May 2010
Equitable Life policyholders came a step closer to getting compensation today when plans to pay them were included in the Queen's Speech.
The Equitable Life Bill paves the way for the Government to make "fair and transparent" payments to policyholders who lost money due to the problems at the society.
It also give the Treasury statutory authority to "incur expenditure" to pay them redress.
The compensation will cover both existing and former policyholders of Equitable who suffered losses as a result of Government maladministration.
The Government had already signalled its intention to help policyholders in its coalition agreement, when it said it would implement the Parliamentary Ombudsman's recommendations to make payments to people who suffered through the collapse of the mutual.
The Parliamentary Ombudsman called for policyholders to be paid redress in 2008 after finding 10 instances of maladministration by regulators and Whitehall officials in relation to Equitable in the period leading up to December 2001.
But the then-Labour government rejected many of her findings and said it would make ex-gratia payments to people who had been "disproportionately affected" by the problems at the society.
Chris Wiscarson, chief executive of Equitable Life, said: "We are delighted with the Government's immediate response and look forward to working with them."
Equitable policyholders are waiting for the publication of a report by former Appeal Court judge Sir John Chadwick, who was advising the former government on the level of compensation that should be paid to members of the society.
The Equitable Members Action Group (Emag) had accused the former government of dragging its feet, pointing out that around 15 policyholders a day were dying without receiving any compensation.
Equitable Life was brought to its knees in 2000 when it lost a legal battle in the House of Lords over the rights of policyholders, forcing it to close to new business.
Worth £26 billion in its prime, it now has around 200,000 with-profits policyholders and a £5.54 billion with-profits fund.
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