EMAG

The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

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Best Media Stories: 18/01/2009 - The Best of the press coverage of Yvette Cooper’s Statement

18 January 2009 - The Best of the press coverage of Yvette Cooper’s Statement

Equitable delay truly beggars belief

Mail on Sunday, by Jeff Prestridge
18th Jan 2009

When the Government announced before Christmas that it was delaying its response to the Parliamentary Ombudsman's report into regulatory failure at insurer Equitable Life, campaigners assumed it could only mean good news. They thought, quite reasonably, that after years of playing hardball with them over their cry for compensation, the Government had finally been persuaded by many of their constituency-focused MPs to pay up.

How wrong these earnest campaigners were. Last Thursday, eight years after Equitable Life stood on the verge of financial collapse as a result of gross mismanagement (by directors who have long fled to enjoy rich retirements) and regulators failing to do what they were supposed to do to justify their fat pay packets and pensions, the Government finally got round to spelling out what it intends doing for Equitable's 1m policyholders. And casting aside the spin, 'not much' sums up its response.

For those Equitable customers who are retired and have suffered real financial hardship as a result of the mutual having to take an axe to their pension plans to keep the company afloat, the Government's failure to acknowledge properly their precarious situation truly beggars belief.

In the Government's defence, it has grudgingly apologised to Equitable's policyholders for the significant distress they have suffered as a result of the regulator's failure to monitor adequately the mutual in the lead-up to it closing to new business in 2000 after disclosing a multi-billion pound black hole.

But the apology, requested by Parliamentary Ombudsman Ann Abraham last summer, has taken six months to extract - and will not make a jot of financial difference to the lives of those wrecked by Equitable Life.

But on the crucial issue of compensation, which the Parliamentary Ombudsman, the European Parliament and key Parliamentary-select committees all believe Equitable policyholders should have, the Government has not come up with the goods.

Instead, it has played for yet more time - presumably so that more policyholders can die - by appointing an insurance grandee, Sir John Chadwick, to look at how payments to deserving policyholders can be made.

So, instead of compensation being paid to everyone, Chadwick's brief is to come up with a scheme that will focus only on addressing those Equitable Life policyholders who have suffered 'real' financial hardship.

How long it will take Chadwick to devise such a restrictive payment scheme and to determine who is eligible - and then for the Government to give the go-ahead for payments - is anybody's guess, but it would be surprising if by this time next year any Equitable policyholder had received a penny.

As Ros Altmann, one of the country's leading pension campaigners, says: 'Justice delayed is justice denied.'

The Government has badly let down Equitable Life's policyholders. In doing so, it might think it has been smart and politically savvy - after all, most policyholders are perceived to be middle-class Tory voters. But it hasn't.

Instead, it has done the cause of long-term savings terrible damage and it has given bloated regulators carte blanche to do what they do best - fail to regulate.


Equitable: another judge, still no justice

The Sunday Observer, 18th Jan 09,
by Ruth Sunderland

As I feared, the government has employed delaying tactics yet again in its shabby treatment of the victims of the Equitable Life collapse.

Chief secretary to the Treasury Yvette Cooper has - belatedly - apologised to them on behalf of successive governments and regulators, but, instead of establishing a compensation scheme, has appointed former judge Sir John Chadwick to determine how much of the blame lay with the regulators. It is a transparent attempt to minimise the amount of redress government will have to pay, which is perhaps an understandable piece of realpolitik at a time when the public purse is under such strain, but nonetheless morally suspect.

Cooper wants to reconcile the findings of the parliamentary ombudsman, Ann Abraham, who found a decade of failure by the regulators, with those of Lord Penrose, whose earlier report described Equitable as "the author of its own misfortunes". The reliance on Penrose as a justification for limiting compensation has always seemed to me highly dubious. So what if the company brought about its own collapse? Virtually all failed companies do, but that does not mean the regulators are in the clear. Anyone who has read Penrose from cover to cover - and I am one of them - knows that, far from exonerating the regulators, he pointed to serious shortcomings. He said that the system failed policyholders, that regulators knew about some of the insurer's questionable practices but did nothing, and that the watchdogs were in thrall to Equitable's now-disgraced actuary, Roy Ranson.

By instigating further delay, the government has subverted and undermined the ombudsman. It has also deprived the 30,000 policyholders who have died while the case has limped along of possible compensation. Campaigners say elderly victims are dying at a rate of 15 a day. Sorry just isn't good enough, Ms Cooper.


Plenty of life left in the sad Equitable tale as the government fails to draw a line under it.

The Sunday Observer, 18th Jan 09,
By Lisa Bachelor

What a rollercoaster week for Equitable Life policyholders. First there was tentative optimism as speculation prompted (by our own website, guardian.co.uk/money) about an announcement on compensation, then excitement following a leak to the press suggesting that, yes, compensation was on the cards ... and then deflation as the deal itself was announced by the government.

The speech started on a positive note for Equitable policyholders. Yvette Cooper, chief secretary to the Treasury, said she "agreed that there had been maladministration in particular areas" with regard to the regulation of Equitable, and that government action was merited. But then came the caveat. Protracted phrasing was used, but it essentially amounted to two words that have come to epitomise the Brown era in government: means-testing.

And then a further blow: to work out who has been "disproportionately affected" and how much they will get paid could take at least two and a half years, if not "significantly longer".

A judge has been appointed to consider first the total sum that has been lost by policyholders and then to work out what proportion of those losses are the fault of the government. Then he will need to work out which class of policyholder has suffered the greatest impact, taking into consideration, presumably, any detriment to those policyholders who have since died. And there was I thinking that means-testing for the pensions credit was convoluted.

It is obvious why the government is doing it this way. Until recently, it seemed, it had no intention of compensating policyholders. But the collapse of Icesave and subsequent bail-out of UK savers by the government resulted in increased pressure to offer some sort of recompense to Equitable customers, too. Yet the Treasury has to consider the cost to the taxpayer and the implications of any action. It doesn't want to be seen to be giving too much public money, not least because blanket compensation could set a precedent for future collapses. More controversially, it may not want to be seen to be giving lots of money to those well-heeled Equitable customers whose policies, in some cases, have not fared too badly.

But by using a complex system of means-testing after eight years of delay, the government has missed a golden opportunity to draw a line under the whole sorry story. This will not only infuriate the policyholders it wants to appease, but will also - more crucially - continue to fuel the negative public perception of pensions.

It looks like we are going to be reporting on Equitable Life for a long time to come.


Equitable Life victims face wait for redress

Sunday Times, 18th Jan 09By Ali Hussain

Government’s plans to offer compensation to those who lost money in the life-assurance scandal have been branded a complete joke Equitable Life pension holders attend a meeting in 2002

The government’s plans to offer compensation to those who lost money in the Equitable Life scandal have been branded a “complete joke” by victims.

Action groups condemned the fact that payouts would be made only after a consultation period, which could last more than two years. Details of the process remain vague.

Equitable, the world’s oldest life-assurance company, came close to collapse in 2000 after a House of Lords ruling stopped it cutting policy benefits for 90,000 members. The decision left it with a £1.5 billion shortfall.

More than 1m people lost up to half their life savings. Last year a parliamentary ombudsman’s inquiry found government regulators guilty of maladministration over the supervision of Equitable for over a decade.

The government admits that the Financial Services Authority, the City watchdog, should not have accepted the reinsurance of Equitable in 1998, which would have triggered its collapse earlier and prevented “late joiners” signing up.

Paul Braithwaite of the Equitable Members Action Group (Emag), which represents the interests of Equitable victims, said: “The sad fact is that 32,000 people have already died waiting for this to be sorted out, and the annuity holders, whose average age is 80, are dying at the rate of 100 per week, so it would be a conservative estimate to say 10,000 more will die without receiving anything.”


Watch ministers wriggle to avoid Equitable payouts

The Independendent on Sunday
Julian Knight, 18th Janury 2009

If the Government had not tried to squirm out of its responsibilities five years ago, there might have been enough cash to compensate all policy holders

Fortunately, I have never seen anyone dragged kicking and screaming. But I had a taste of what it might be like last week watching the Chief Secretary to the Treasury announce that – after delaying as long as possible and seeing a great chunk of policyholders die off – the Government will offer compensation to members of Equitable Life, the insurer that imploded in 1999.

Yvette Cooper finally apologised for the Government's "maladministration" of Equitable, the use of the M word being important as it was the one used by Ann Abraham, the tireless Parliamentary Ombudsman, in her painstaking report on the debacle. And it was this word that gave ministers so little wriggle room.

But the Government will wriggle nonetheless. Take, for instance, Ms Cooper's caveat that compensation will go to the "hardest hit". What does this mean? That only those who lost the most cash will be paid, or that there will be some form of means-testing of compensation? If it's the latter then will only retired policyholders get any cash? Perhaps payouts will be confined to those currently living off benefits. In which case, will the compensation bar the claiming of those benefits?

Another caveat is that compensation will only be made, in that age-old government phrase, "as public finances allow". (If only they had taken such loving care of our money over the past decade.) The truth is we're as broke as we have been since the mid-Seventies, when we had to call in the International Monetary Fund. As a result, I fear Equitable Life members will have to wait and wait, and no doubt some won't live to see their compensation cheque arrive.

If only, instead of squirming out of its responsibilities, the Government had admitted its huge failure in regulating Equitable when that was first made very clear in the 2004 Penrose report; at that stage, the public finances were still up to paying compensation.


Equitable Life payout
'an insult'

Scotland on Sunday, Teresa Hunter 18th January 2009

EQUITABLE Life policyholders have reacted with fury at the Government's offer of compensation after their eight-year battle for justice following the collapse of the UK's most reputable insurance company.

They are delighted that the Government has finally acknowledged culpability, but have dismissed the compensation package outlined in Westminster on Thursday as a "cynical manoeuvre" designed to once again kick the issue into the long grass.

society member Paul Weir, who was encouraged to invest shortly before the company collapsed, said: "We have been sold down the river again. This isn't compensation, it is charity to keep the most badly hit out of the workhouse. It is an insult."

Around a million investors have been battling for £5bn in compensation since 2000, when the company shut up shop.

It was on the verge of bankruptcy, having sold pension guarantees it could not afford, and lost a House of Lords battle it had hoped would let it renege on those contracts.

In the months that followed, policy values were slashed in a series of swingeing cuts designed to keep the company afloat. Many members lost a third of their investments. The pensions of some with-profits annuitants were slashed in half.

Initially, and for many years, the Government steadfastly rejected any suggestion that regulators had failed and rebuffed claims for compensation, despite a report from Lord Penrose pointing to failures at the Government Actuary's Department, and the damning conclusions last summer of a four-year investigation by the Parliamentary Ombudsman Ann Abraham.

But on Thursday they finally admitted the Government's regulators had made mistakes. And Treasury minister Yvette Cooper acknowledged that this failure had been partly to blame for their losses, which had left many in penury in old age.

She apologised to victims and said compensation would be forthcoming, as Abraham had recommended – but only to those who had lost the most and were now in greatest financial difficulty.

In fact, she rejected Abraham's recommendation that an independent tribunal should be set up to fairly assess all individual claims.

Instead, the Treasury has asked former Lord Justice of the Court of Appeal, Sir John Chadwick, to advise on how compensation could be made, according to a very restrictive brief given to him by ministers.

While Cooper accepted that regulatory failure had contributed to their losses, she argued that culpability on the part of others, such as the society's management, should not leave the Government shouldering full liability.

On this basis, and with an eye to protecting other taxpayers, Cooper indicated compensation would be limited to those facing the biggest hardship and who have suffered a "disproportional impact".

Policyholders reacted angrily. Liz Kwantes, a member of the Equitable Members Action Group, said: "It is just a matter of stringing the whole thing out for years yet. Anyway, how will they decide who is the most disadvantaged? How do they know what other pensions people might have?

"Does this mean we will all have to engage in endless form-filling? What if you don't want to fill in a form, or if you are too old or infirm to be able to do so?"

The precise brief given to Sir John Chadwick will be to advise on:

  • the extent of relative loss;
  • the proportion of those losses which should be attributed to (a) the maladministration accepted by the Government; and (b) the actions of Equitable Life and others;
  • which policyholders have suffered the greatest impact;
  • any factors the Government might take into account when reaching a final view on "disproportionate impact".

It will probably take him many months to set up his office and acquire a staff, and years before he is in a position to make any sensible recommendations.

Meanwhile, policyholders are in the dark. No fund has been announced, nor any timetable, so it is impossible to know who if anyone will receive redress.

However, Cooper indicated that someone who was still in work and able to repair damage to his or her pension by saving more now would not be looked upon sympathetically. In other words, they are not a priority and may get little or nothing. Similarly, anyone with other investments or sources of pension will not be considered a deserving case.

MPs on all sides of the house called for interim payments for the very elderly, poor, frail or ill. Yet while Cooper did not rule them out, she indicated there could be practical difficulties which might delay settlements.

MPs also asked about the treatment of the 30,000 policyholders who have died. Cooper was unable to promise that estates would benefit if it was at the expense of the taxpayer, but she did indicate that widows and widowers might be helped if they were disproportionately impacted.


Debt-addicted Government bangs another nail into savings culture coffin

Daily Telegraph, by Ian Cowie 17th January, 2009

Bad numbers take longer to add up than good ones, so it should come as no surprise that the long-awaited Government statement on Equitable Life should prove such a desperate disappointment.

It is more than a decade since Britain's oldest life company ran into trouble – and five years since the start of a series of damning official reports into this scandal, including two from Ann Abraham, Parliamentary Ombudsman.

But Yvette Cooper, Chief Secretary to the Treasury, had nothing more to offer the victims this week than warm words and more delay. Nevermind that an estimated 30,000 of them have died since this over-promised fund pulled down the shutters and closed to new business in 2000.

Equitable had about 1.5m policyholders when it hit the rocks and about 500,000 remain onboard today. The fact so many are still paying premiums could be described as a triumph of hope over experience – and some may be tempted to believe the Minister's apology could turn into cash one day. Sadly, it won't be any day soon.

None of Equitable's without-profits policyholders will get a penny compensation this year– and Ms Cooper added that the Government may not even hit the two-and-a-half-year target for payouts set by Ms Abraham. To add insult to injury, the Treasury Minister studiously avoided the "c" word – preferring to talk of "an ex-gratia payment scheme" rather than compensation.

Worse still, she repeatedly insisted that payments will only be made to those whose loss has been "disproportionate". Nobody can be quite certain what this means – other than another beanfeast for the lawyers and further delay. But Equitable's policyholders will not be the only losers in this long-running saga. The savings ratio has collapsed to a 20th of its level in 1997, when more than 10pc of household income was set aside for the future. This shameful scandal will deter many others from saving and investing.

Perhaps we should expect nothing more from a Government that believes it can borrow its way out of the debt crisis. Perhaps it hopes more victims will die before it is forced to compensate them. One thing is sure; The Daily Telegraph and its readers will keep up the fight for justice.


Equitable victims decry government ‘tricks’

Financial Times, by Andrea Felsted and George Parker January 16 2009

Victims of the Equitable Life debacle on Thursday accused the government of “dirty tricks” and threatened a legal challenge over fresh delays to any compensation.

Equitable policyholders won an apology from the government – its first – over regulatory failures, but face a further setback to hopes of an end to the affair.

Yvette Cooper, Treasury chief secretary, accepted a parliamentary ombudsman’s report that maladministration contributed to the near-collapse of Equitable in 2000, which led to 1m policyholders losing up to £5bn.

While apologising for those blunders, she infuriated Tory MPs by announcing new hurdles to be crossed before any compensation can be paid. Ms Cooper appointed Judge John Chadwick to assess the extent to which regulatory failure was to blame. The inquiry could take more than two years, Ms Cooper said, after which any ex-gratia payments would have to take into account the state of the public finances.

Even then, not all Equitable policyholders would necessarily qualify for help, Ms Cooper added, as she wanted to help those “disproportionately affected”. Questioned by MPs, she said policyholders who were young enough to make other arrangements could expect little help.

Vanni Treves, chairman of Equitable, said means-testing of policyholders’ eligibility for compensation would be “absolutely wrong” and “would cut absolutely across what the parliamentary ombudsman concluded”.

Ms Cooper said any payments made would not establish a legal precedent that the taxpayer would make amends for regulatory failure.

Paul Braithwaite, general secretary of the Equitable Members Action Group described the government’s long-awaited response to the ombudsman’s report on the Equitable affair as “shameful”.

“While we welcome the apology, which is long overdue, it is still more of the same – an attempt to quarantine the issue until after the election and embark on yet another open-ended process during which time thousands more will die waiting for justice,” Mr Braithwaite said. Campaigners are examining legal action but fear the structure of the government response could make such a challenge difficult.

Ros Altmann, the former Downing Street adviser who led a campaign for compensation for people who lost their pensions when their employers went bust, said the response was “unfortunately just another chapter – it is not the conclusion”.

Equitable campaigners are concerned about the independence of Lord Chadwick, as he used to perform legal work for the Department of Trade and Industry. He was, however, also one of the judges who found against the government over pension compensation.

The Conservatives on Thursday accused the government of “foot dragging”, but also tried to limit potential liabilities for a future Tory government. Any compensation paid by the Tories would be restricted by the state of the public finances and would only relate to the element of blame attached to maladminstration, not the incompetence of the company itself.


Equitable: thousands died waiting for cash

Daily Telegraph, by Yvette Essen 16th January 09

There's an old saying: "Better late than never". However, for the 30,000 former Equitable Life policyholders who have died since the UK's oldest mutual insurer nearly collapsed a decade ago, late means never.

Yesterday the Government finally agreed to give compensation to some of the hundreds of thousands of people who saw up to half of the value of their pension pots vanish after Equitable was forced to close to new business in 2000.

But while Yvette Cooper, Chief Secretary to the Treasury, apologised for "injustices for policyholders" caused by government failures to properly regulate the society, a legitimate question to ask is: what took the Government so long?

The near-collapse of what was once a trusted mutual society, whose roots can be traced back to 1762, has become one of the biggest financial scandals to hit this country. At its peak, Equitable was a £26bn business with 1.5m policyholders, but it fell sharply from grace after being unable to pay out guaranteed annuities.

There have been some 15 investigations into Equitable's demise, including a report in 2004 by Lord Penrose that criticised the way the Society was regulated by the Government. Three years later, the European Parliament also stated that UK regulators did not properly supervise Equitable Life.

Over the past decade, the Government has shied away from taking responsibility for Equitable's failings, and refused to dip into taxpayer funds to compensate policyholders. But some pension experts believe the Government is now having to offer payments because a damning and exhaustive report from its own Parliamentary Ombudsman has given it no room to wriggle out of its responsibilities.

The findings by Ombudsman Ann Abraham were published in July and are the most extensive report into Equitable's demise. The document runs to 2,819 pages over five volumes, is six inches thick and weighs a hefty 8kg.

Titled A Decade of Regulatory Failure, it cites 10 instances of maladministration by the Department of Trade and Industry, the Government Actuary Department and the Financial Services Authority between 1998 and 2001 and called for compensation.

Duncan Howorth, chief executive of JLT Benefit Solutions and president of the Society of Pension Consultants, said: "The report was very comprehensive and its findings were clear."

Yesterday the Government defended its stance, saying Equitable's problem's were "ultimately precipitated by the Society's own actions".

Some pension experts give a more sinister reason as to why the Government has dug in its heels, suggesting that it has been waiting for people to die so as to avoid making large payments.

Ros Altmann, a pensions campaigner who spent years lobbying the Government to pay assistance to people who saw their occupational pension savings slashed when their former employers collapsed, said the Government is deliberately acting slowly. "One has to be cynical," she said. "The Government will do as much as it can to draw things out to leave people waiting and waiting and dying in the meantime."

Equitable Members Action Group (EMAG) estimates a further 10,000 Equitable policyholders will pass away by the time the Government signs the last cheque. It said the Government kept "beating away" the Equitable issue, hoping that it would subside.

Paul Braithwaite, EMAG general secretary, said: "The Government state of delay, delay, delay was on the assumption that the media would lose interest, the complainants would lose heart and that the investors would age and give up. It has been a pure case of Sir Humphrey finding every which way to tie complainants in knots."

He added any argument that the Government should not use taxpayers' money to bail out what was fundamentally a private business no longer washes. "It's lunatic to say this would set a precedent," he said, referring to the Government guarantee last year for the assets of British savers in an Icelandic internet bank. "What is a precedent if Icesave isn't?"

While yesterday's announcement may provide a crumb of comfort to Equitable policyholders, Ms Altmann is sceptical this will be the end of the matter. She cites the Government's decision to compensate those who have been "disproportionately affected" as a way to drag out the process further with more debates.

"This is just the beginning of another chapter," she said. "Not the conclusion, unfortunately."


Equitable investors face further delays

The Independent by James Daley,
16th Jan 09

Government apologises as it considers compensation

The Government finally offered an apology yesterday for its mishandling of the regulation of Equitable Life, but was attacked after failing to say when it would provide compensation for some of the thousands of policyholders who lost out as a result of itscollapse, or how much.

Speaking to the House of Commons yesterday, the chief secretary to the Treasury, Yvette Cooper, conceded that the Government had been guilty of maladministration during the 1990s and the early part of the current decade, and would now look to compensate those who had been "disproportionately" affected by the insurer's demise.

"I think the whole House regrets the mismanagement of the Society that caused problems," she said. "And I wish to apologise to policyholders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place."

The apology and promise of compensation comes more than eight years after Equitable's collapse – during which time more than 30,000 of those who might have qualified for financial support have died.

Ms Cooper said the Government had appointed the Lord Justice of the Court of Appeal, Sir John Chadwick, to consider what proportion of policyholders' losses were incurred as aresult of maladministration.

Once Sir John's report has been finished, Ms Cooper said, the Government would set up a scheme to make payments to those who had lost out.

But she stressed that the state of the public finances would have to be taken into consideration when deciding on the size of the payments, and to whom they should be paid.

Policyholders angrily criticised the Government's proposals, pointing out that thousands more people would now die before being compensated.

Paul Braithwaite, general secretary of the Equitable Members' Action Group (EMAG), said: "EMAG is appalled to see that after eight years of delay and dissembling the Government has kicked the issue of compensation for proven injustice into the long grass yet again. This cynical manoeuvre will ensure that many more pensioners die without obtaining the fair redress that the Parliamentary Ombudsman called for.

Referring to the Financial Services Authority, Braithwaite said, "The Government's statement shows that the words 'Regulated by the FSA' on your pension policy are a worthless fantasy. Buyer beware: there is no protection for pensioners in the UK. It's no wonder there's no trust. In our view, 100 per cent failure should demand 100 per cent compensation – not a discretionary handout."

The Conservative Party also criticised the Government, saying it was ignoring the recommendations of both the Parliamentary Ombudsman and the Public Affairs Select Committee in its approach to paying compensation.

"We welcome the fact that the Government has finally admitted failings and will compensate thevictims of the Equitable Life fiasco. But we are disappointed that the Government has torn up the Ombudsman's timetable for compensation, and there is no guarantee when policyholders will receive any payments for the losses they have suffered," said Mark Hoban, the shadow financial secretary.

Case study: "We will continue to fight"

Ann Berry, a 70-year old retired physiotherapist from Sussex, is still suffering from the collapse of Equitable Life eight years ago.

Back in 1998, she used all four of her personal pensions to buy a with-profits annuity with Equitable, which promised to pay her an annual income which would grow each year. After the Society's collapse, however, her income collapsed – and she now estimates that she is receiving around 50 per cent less every year than she would have done had the insurer not hit the rocks. As a result of her much reduced pension she was recently forced to sell her home, buying a smaller and cheaper property which is not big enough to accommodate her family when they come to visit.

"I had to move into a small bungalow just so I could release enough capital from my property to live," she says. "I know that I'm lucky to have a house, but this is not what I thought I was signing up to when I bought my annuity with Equitable 10 years ago."

Ms Berry said she was very disappointed with yesterday's statement by the Government, and said she was still not convinced that she would see any compensation. "We're not going to give in," she said. "We'll continue to fight."


Apology for Equitable savers — but no payout yet

The Times, by Miles Costello
16th Jan 09

One million savers were given an apology — but no promise of early compensation — when the Treasury issued its long-delayed response to the verdict that regulators were partly responsible for the near-collapse of Equitable Life.

Although the Treasury confirmed an ex-gratia scheme yesterday, campaigners and MPs condemned proposals to means-test payments.

There was anger, also, at the Treasury’s admission that it could take “significantly longer” than two and a half years before any cash is paid out. Ministers were accused of using “dirty tricks” to put off payments until after the next election.

Justifying the delay, Yvette Cooper, the Chief Secretary to the Treasury, said that the level of official responsibility had still to be decided.

She announced the appointment of a former Lord Justice of Appeal, Sir John Chadwick, to work on a scheme to pay compensation to those who were hit “disproportionately”.

Vince Cable, the Liberal Democrat economy spokesman, said that ministers had grudgingly accepted a watchdog’s recommendation to compensate victims.

“This fiasco has shown the Government at its most shabby and disreputable,” he said. “Many policyholders have died while ministers have dragged their feet.”

Ms Cooper said: “I think the whole House regrets the mismanagement of the society. I wish to apologise to policyholders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place.”

It later emerged that the Government has rejected four of the ten findings of maladministration in a scathing report by the Parliamentary Ombudsman into the near-collapse of Equitable Life in 2000.

Ann Abraham accused three government departments of presiding over a “decade of failure” at Equitable Life in her report last July. She said that regulators had been “passive, reactive, and complacent”.

The society was forced to shut for new business after the House of Lords ruled that it must honour its financial obligations to customers holding guaranteed annuity policies.

It left Europe’s oldest mutual society facing liabilities of £1.5 billion and prompted a collapse in the value of policies.

More than one million policyholders lost an estimated total of £4 billion. Hundreds have since died, some having committed suicide.

An eight-year campaign has led to two damning reports into the debacle.

Ms Cooper, whose apology was unexpected, admitted that regulatory returns submitted by Equitable from 1990 to 1996 should have rung alarm bells but did not.

Quoting from the Penrose report, she said the society bore the main responsibility.

Paul Braithwaite, who runs the Equitable Members’ Action Group, said that the long-awaited statement left unanswered which policyholders would be compensated, by how much and when.

“In effect, this is more dirty tricks and it just parks the problem until after the next general election,” he said. “This is exactly like a Gordon Brown Budget, when the devil is in the detail and you only see it a day later.”

Vanni Treves, the chairman of Equitable, gave a “subdued welcome” to the Government’s plans.

He said that much would depend on Sir John’s terms of reference for calculating payments. “What is meant by disproportionate impact? This is tantamount to means-testing,” he said. “Compensation should be related to individual loss. We would, of course, have been delighted if the Government had accepted the ombudsman’s recommendations without qualification.

"But in my own heart I knew that there was more chance that pigs might fly.”

Tony Wright, the Labour MP who is chairman of the Public Administration Select Committee, which recently issued a report on the issue, said that the proposed scheme was excessively narrow.

He said: “The proposal that policyholders’ ‘wider circumstances’ should be taken into account ... would seem to require people who may be very old or very ill — or just very proud — to submit themselves to a kind of means-testing process before any of their losses would be made good by the Government.

"As we said in our report, the payment of compensation is not a matter of charity but a requirement of justice.”


The great Equitable sellout

Alex Brummer in the Daily Mail
16th Jan 09

New Labour has feet of clay when it comes to pensions. The party of protection from cradle to grave has made serious and painful mistakes, starting with the abolition of the dividend tax credit, which have permanently stained its reputation.

The shabby treatment of Equitable Life policyholders is not an aberration but part of a consistent theme of the last 11 years.

The Chief Secretary to the Treasury, Yvette Cooper, may have had the good grace to offer a public apology to Equitable Life investors at the dispatch box. But what followed was wholly inadequate.

Yes, there will be compensation for the worst affected people holding retirement policies.

However, instead of being paid automatically, this would be an ex-gratia scheme, which means it sets no precedents.

Most importantly, though, not all the one million or so policyholders will receive the payouts.

These will be based on an allocation of losses between regulatory failure and the responsibility of those who ran Britain's oldest insurer.

This Solomon-like division will have to be made by Lord Justice Chadwick. Tens of thousands of Equitable policyholders have already passed on to another place since their life savings were truncated.

Perhaps the Treasury is counting on many more souls leaving this world before it decides on the deserving few.

What is particularly disturbing is that Equitable Life (unlike, say, the collapse of Northern Rock and Bradford & Bingley) may be the most investigated collapse in history.

There has been an internal probe by the Financial Services Authority, a full judicial inquiry by Justice Penrose and two investigations by the Ombudsman Ann Abraham.

In addition there have been a series of favourable rulings in Europe. That another tribunal should be needed at this stage is ludicrous.

Abraham found at least ten cases of maladministration and even Penrose, who found that the mutual was largely a victim of its own errors, discovered a series of regulatory howlers by the Government Actuary's Department.

Far less maladministration than this was considered enough for the government to compensate in full after the ombudsman report into the Barlow Clowes Investment Group in 1989.

Of course, any government has a duty to make sure that public money is spent properly and wisely. As much as £4billion to £5billion could be involved.

But were the Equitable Life policyholders savers and depositors in the North East of England rather than the middle classes living in the shires, then justice and compensation would have happened long ago.


Anger over Equitable Life scandal payments “betrayal”

The Scotsman, by Gerry Peevy
16th Jan 09

MINISTERS have been accused of betraying a million Equitable Life policyholders, as it emerged only a few may receive compensation after another review delay.

Yvette Cooper, the Chief Secretary to the Treasury, apologised for the maladministration of the scheme, which left about one million people out of pocket.

But she provoked anger from campaigners and MPs when she confirmed that the government woul d defy recommendations by the Parliamentary Ombudsman for an independent panel to investigate all claims.

Instead, she said a retired judge would decide on ex-gratia payments only to those who had been "disproportionately affected". She said there would be "serious repercussions for the taxpayer" if compensation was paid each time regulators failed to stop a firm getting into trouble.

No timescale could be put on when any decisions would be made, despite the maladministration being brought to light eight years ago. MPs criticised the "means-testing" of payments.

Paul Braithwaite, of the Equitable Members Action Group, said policyholders would be "depressed that this is more of the same stitch-up", and Vince Cable, the Liberal Democrats' Treasury spokesman, said many policyholders had died "while ministers have dragged their feet".