“Two wrongs that must be made right
It is a fact of financial life that victims of wrongdoing – invariably hard-working, hard-saving citizens – do not always get the justice they deserve. Over the life of the current Government, two groups of investors badly wronged by the financial services industry, and those who regulate it, have not received satisfactory justice.
They are investors in Equitable Life and Arch Cru, monstrous financial scandals of our time – indeed of any time. Speak to anyone who took out a savings plan with Equitable in the 1980s and 1990s and they will tell you they have been horribly let down.
They saved diligently throughout their working lives to ensure they were not a burden on the State and to enjoy a retirement free from financial worry. But 14 years on from suffering catastrophic financial losses after Equitable nearly went to the wall as a result of mismanagement and regulatory failure, they are still waiting for justice to prevail. Although the present Government, unlike the previous Labour administration, agreed in 2010 to pay £1.5 billion of redress, it has still left nearly a million policyholders feeling short-changed. The compensation only covers a tickle over 20 per cent of the losses they incurred.
Such an obvious case of financial injustice explains why many Equitable victims, most now in their 80s and 90s, continue to campaign ferociously for the wrongdoing done to them to be addressed satisfactorily... Equitable savers are being treated like second-class citizens, especially in light of the 100 per cent protection customers of bailed out banks received (quite rightly so) in the wake of the 2008 financial crisis. This monumental financial injustice remains a blot on the financial landscape. It is to the Government's great discredit that it hasn't removed it...”
Jeff Prestridge in the Mail on Sunday, 27 December 2014
“My schoolboy error was to invest in a pension.
…About 40 years or so ago, when I started earning decent money, my accountant asked if I had a pension fund. I don't look for advice from my accountant and certainly not from any financial advisers. Have you met any of them? Well then.
He pointed out that there was a tax advantage in paying into my own pension pot, but it was up to me. I did the figures on the back of an envelope, trying to work it out. There was a tax advantage on the contribution, but what if I kept all the money, paid the tax, then invested it myself — bought a flat, say, or some Penny Blacks — would I not be just as well off?
The accountant and all the clever-clogs I spoke to shook their heads at my stupidity. They explained that when I came to take the money from my pot, which would grow all the time, I would get 25% tax-free and the rest would buy an annuity — a pension for life. How good was that? The government clearly wanted you to do it, and had structured the laws accordingly. So, at the end of every tax year, I used to put away a large sum. It was a few years before I realised that once you had contributed to your pension pot, it was gone, no longer in your hands. I also hadn't realised that your annuity, when you took it, would be taxed. And when you died, anything left would belong to them, not you. My own stupid fault: starting it without fully understanding it…
The Equitable had been going since 1762, had bishops and ambassadors among its 1.5m customers, so must surely be totally reliable. I had policies described as “with-profits”, wording I wasn't really clear about, but the nice suits explained that highs and lows would be evened out so I would always be sure of a steady return.
Then one day, at the end of 2000, I heard the dreadful news. Equitable had run out of money and hit the rocks because it couldn't pay the promised annuities. There was confusion for a couple of years, then it emerged that the Prudential had taken over my annuities — but each year they went down by about 20%!
I suppose that between us — for I put money in for my wife as well, saying “sign here, pet” — we had invested several hundred thousand pounds in the Equitable over 30 years. In the past year or so, we have had about £10,000 in compensation for the reduced annuities. This year, our annuities seem finally to have stabilised.
I have drawn out a lot, by starting early, so I was luckier than some. But really, what a mistake. At least we are still working. Think of all the poor sods with no other income who planned to rely on the Equitable for their retirement years…
None of our three children has a pension fund, partly because they are self-employed. One is a writer, one is a barrister, one is a designer. They have never had enough spare money, but partly I suspect it is because they have heard me moaning on about my pensions…”
Hunter Davies in The Sunday Times 16 November 2014
“Equitable compensation group in Commons bid. The campaign launched 13 years ago to win compensation for victims of the Equitable Life scandal has been ramped up ahead of the General Election.
SEEKING JUSTICE: Actress Honor Blackman has a pension with Equitable Life and leads the campaign group.
MPs from all the major parties will speak at a rally in Westminster's Central Hall today which is expected to attract hundreds of members of the 10,000-strong Equitable Members Action Group.
EMAG is calling on the government to "settle its debt" to 945,000 Equitable Life savers who were paid just 22p in the pound of their losses from policies that crashed in value when the mutual society almost went bust in 2000.
They had to share what was left of a £1.5 billion compensation fund after the government decided four years ago that it could not afford to reimburse the £4.3bn of identified policyholder losses, and that the lion's share of the fund would go to the 37,000 retirees already receiving their annuities.
Paul Weir, EMAG committee member and spokesman who estimates his overall loss at £45,000, said: "If somebody had a cheque for £5,000 it just reminds them that they are still missing £20,000 of their own pension fund. With the economy on the mend, the Treasury should settle its debts."
The group's case for compensation is based on a 2,800-page report in 2008 by the then Parliamentary Ombudsman Ann Abraham, which found the government guilty of maladministration and injustice in its supervision and regulation of Equitable Life.
In a submission to MPs EMAG argues that the 945,000 past and present members are owed the balance of £2.8bn because Chancellor George Osborne had in 2010 accepted the ombudsman's finding but said that in times of austerity "a balance had to be struck between being fair to policyholders and being fair to taxpayers".
During its nine-year campaign to achieve a pay-out, EMAG twice went successfully to the High Court to overturn government rulings attempting to head off the wide-ranging report into its Âadministration. The Treasury had said such matters were "outside the ombudsman's remit" while the Financial Services Authority had insisted Ms Abraham was "highly unlikely" to prove maladministration.
Mr Weir said the only reason given for not reimbursing losses in full had been "affordability constraints". He went on: "We think the time is now right to revisit that decision. The UK economy is said to be recovering and Equitable victims are not getting any younger. Many have died before receiving any payment. Equitable pensioners feel like they have received a down payment on a debt which has yet to be fully settled and which falls far short of the loss they have suffered to their retirement fund."
Veteran actress Honor Blackman, who has a pension with Equitable Life and is EMAG's president, said: "After what happened to us, why would anybody in their right mind bother to save for a pension?"
The EMAG report says: "The figure of £4.3bn is the agreed acknowledged debt for the failure of government regulators. The Court of Appeal this year ruled in favour of certain disabled people that had had their benefits reduced through government cutbacks, saying 'equality is not an option to be removed just because there are times of austerity'.
"Nearly one million non-annuitant policyholders, acknowledged to have lost £3.5bn directly down to regulatory failure, have been short-changed thus far by a staggering £2.7bn. They've only been paid, after a decade-long fight, just over a fifth of their losses - not fair!"
The group says payments could be phased over two or three years but there could be "no justification for closing the book on the Equitable Life saga.”
Simon Bain, in the Herald Scotland 22nd October, 2014
“The latest annuities scandal: The pensions that shrink to zero. Hundreds of thousands of people relying on investment-linked pensions for their retirement income are facing the terrifying possibility that their payments might dry up
A number of worried pensioners have written to the Telegraph with details of their continually shrivelling pension incomes from such policies. In some cases the annual reductions are small, but in the worst cases, pensioners in their 70s and 80s are now receiving incomes less than half their original pay outs.
Most, but not all of the complaints, relate to the 50,000 policies of this sort issued by Equitable Life
To help make up for their dwindling incomes, and because government regulation was deemed to be partially responsible for the firm's downfall, the Government has been topping up the incomes of customers who bought Equitable Life with- profits annuities after 1992, using a complex formula to calculate how much individuals are missing out on compared to “typical” with-profits annuities.
But Paul Weir, a director of the Equitable Members' Action Group (EMAG), the campaign group responsible for lobbying the Government over the course of a decade to get compensation for customers, says these payments are “insufficient” and typically only make up around half the losses most people are suffering every year.
The Treasury has confirmed it has no plans to review the compensation, but the group is ramping up pressure on the Government to increase it by launching a fresh campaign which will include a 300-person strong demonstration outside Parliament next week
According to Mr Weir, a number of the group's members that have called Prudential's customer services helpline to voice their concern - only to be told that the incomes they rely on are on a downward trajectory heading toward zero
Katie Morley, in the Sunday Telegraph 19th October, 2014
“Many of us entrust pension companies with our financial futures and a serious error on their part can result in not just inconvenience, but turmoil for a family's long-term prospects
When so much is at stake, there is no place for savers being misinformed about the size of their pension pot or income prospects to the tune of thousands of pounds.
As a constituency MP, I have come across cases of people being given seriously misleading information about their pension position and making life-changing decisions on the basis of that information.
When this happens they should get proper compensation, not just a token payment
While it is important that we have systems of redress and compensation schemes, they are no substitute for companies treating their consumers fairly in the first place
Amazingly, the average Briton has 11 different jobs in their lifetime. Even a financial expert would have trouble keeping track of 11 different pensions and understanding the retirement income they could expect from them, so what hope for the rest of us?
It's my strong view that for decades we have allowed pensions to become far too complicated. The basic idea that you put money aside when you are working so that you can draw on it when you are not working is not a difficult one to grasp
We need a new culture in the pensions industry that puts the consumer first.
And when things go wrong, the Mail is right to say that firms should be swift to resolve matters and offer proper compensation. Only in this way will we restore much-needed confidence in saving for retirement through a pension.”
Steve Webb MP, Pensions Minister in the Daily Mail 1st October, 2014
"Equitable Life: £1bn redress has been paid. The Government says it has paid almost £1bn to 877,000 policyholders - but there are still another 160,000 savers who can't be traced.
The Government has paid £973m compensation to policyholders with Equitable Life, the insurer which all but collapsed 15 years ago. HM Treasury said that by the end of June, 877,000 policyholders have received redress under the Equitable Life Payment Scheme. Around half of these are individual savers who had pensions or other policies with the firm. The rest had pensions policies into which they had paid through their work, or with-profits annuities - policies which paid an income but where money also remained invested.
But HM Treasury said there were still 160,000 policyholders "who are due a payment but where the scheme has not yet been able to trace or validate their address".
It said it was still trying to find these eligible savers and would "continue to consider all proportionate actions it can take to do this". Many are thought to be dead&helip;
In October last year the scheme was extended from its original April 2014 deadline to a new deadline in mid-2015, to give eligible policyholders more time in which to come forward or be identified. HM Treasury said a further 17,000 people had been paid since April.
Andrea Leadsom, economic secretary to the Treasury, said she was "pleased with the progress."
Daily Telegraph, by Richard Dyson 23rd July, 2014
Recovery allows us to revisit derisory Equitable payouts
Victims are going to their grave, keenly feeling the injustice. We owe it to society to think again.
Equitable Life, remember them? The world's oldest mutual went pop in 2000 leaving hundreds of thousands of policyholders with a far poorer retirement. Nearly a decade and a half on you could be forgiven for believing from what you read — or more correctly don't read anymore — that Equitable Life has been addressed after the coalition government did put together a package of compensation for policyholders at the cost of up to pound;1bn. But here is the problem a £1bn isn't anywhere near enough to put people back into the position they would have been had they never invested in Equitable Life. After all, it has been clearly shown that regulators were negligent and even potentially culpable in allowing the Equitable to get into the dire straits it did during the 1990s.
I met with some Equitable Life members just the other day and they feel that that they are no longer being heard and that all because a ‘compensation package’ is out there our media culture, which has the shortest of short term memories, has moved its gaze elsewhere.
They are right. Put Equitable Life into the news search on Google and you get virtually no recent hits. But when you hear these people's stories you know that a fundamental wrong has not been addressed, not even slightly. In some cases the compensation has given people less than 15 per cent back of what they lost. All the while the frustration and anger grows and more and more policyholders go to their graves feeling keenly the injustice.
Why am I then writing this now? Well at the time that the compensation package was announced it had a rather large caveat put on it and it was to do with the government finances. As a nation we were in a dire financial state. Back in 2010 I wrote in this column that the UK probably only had a 50–50 chance of avoiding a catastrophic default. However, we have been lucky for a number of reasons and the latest government tax take figures show that the Treasury is now taking in more money than ever before and at the same time the economy is growing at a far faster rate than many predicted. In short, the nation's finances are coming out of the emergency ward and into the recovery room.
I think therefore, this would be a good time right now to revisit the compensation given to Equitable members many of whom are in their 70s, 80s and 90s and really need the money — it could actually stop some people from being a drain on the state's coffers.
It could be done relatively easily, we know how much each policyholder has lost and where they are a simple ex gratia payment — even if didn't give 100 per cent money back would suffice. It would be a further recognition of the wrong that was done them by the regulators. I can understand why the decision was made to cap compensation back in 2010 but for the sake of our society, now is the time to look at it again."
Julian Knight, Personal Finance Editor, Independent on Sunday, 1 June 2014
(Julian is the Conservative candidate for the May 2015 general election, seeking to replace the current MP, LibDem Lorely Burt)
Equitable Life policyholders to receive uplift, but call is still on to ‘settle debts’
Equitable Life's remaining 345,000 policyholders will get a 25% boost to their policies next month, while the 5% exit penalty for leaving the society is finally removed.
The effective 30% uplift in value for anyone wanting to transfer out of the society, which came close to collapse in 2000, means exit may now be a more attractive option.
In 2008, after an eight–year campaign by Equitable Members' Action Group (EMAG) in the courts and in parliament, the parliamentary ombudsman found the government guilty of maladministration, in a 2800–page report.
In 2011, the government decided to award 100% compensation to those who took pensions after September 1, 1992, and nothing to those who retired earlier.
EMAG commissioned an expert report from Scottish actuary David Forfar which found a ‘remarkable consistency of losses’ between both groups, with most seeing their pension income cut by 60% and going down every year. The action group's campaign to reverse the decision, fronted by actress Honor Blackman, prompted the government to announce a year ago that all those excluded would get a £5000 cheque, and payments have been going out this year.
Paul Weir, spokesman for EMAG, which has boasted 50,000 members, commented:
"EMAG's policy remains that the pre–1992s should be treated on exactly the same basis as post-92s, and awarded a properly–calculated amount based on the same formula. The £5000 is a down-payment."
The Equitable Life Payment Scheme, paying out less than one-quarter of their losses to all other EL victims, has one year to run.
Mr Weir said:
"We are ramping up our campaign to persuade MPs that 22.4% of our acknowledged losses is not enough. We want them to settle the debt on the missing 77.4%. We were originally told the amount was capped for ‘affordbability’ reasons. If the economy is improving, that reason no longer holds."
Read the article by Simon Bain in the Herald – 29th March 2014
Letter from EMAG to the Minister, 18th December, 2013
Parliament breaks tomorrow and I want to put on record before that, EMAG's thanks to you personally.
This week I have had literally dozens of thankyous from EMAG members who are pre–1992 WP annuitants — several expressing the view that they didn't expect to live to see any compensation.
In the 15 months you've been in charge of compensating Equitable Life's victims you have listened, taken an interest and made valuable interventions. These have been appreciated by Equitable policyholders and EMAG has given you plaudits for your achievements to date.
EMAG must also give great credit to the 186–strong APPG under the committed leadership of Bob, Fabian and Stephen. They too have played a pivotal part in breaking the log-jam that was engendering hostility to the Coalition.
EMAG recognises that you could easily have left our plight to the new Economic Secretary and we appreciate that you chose not to.
A big thank you, particularly on behalf of the 9,000 WPAs who you ensured received their tax–free £5000 payments this week.
EMAG looks forward to continuing to work constructively with you in 2014.
General Secretary of EMAG
Treasury to pay £50m in Equitable Life compensation next week.
The Treasury will pay out £50m in Equitable Life compensation next week after the Autumn Statement revealed payments would be made earlier than expected.
Speaking at Treasury questions yesterday, Treasury financial secretary Sajid Javid fleshed out details of the payments timetable and revealed 9,000 people would take home £5,000 each next week. A further 450 people in receipt of pension credit will receive an additional £5,000.
The Treasury had been aiming to make payments by next April but Equitable Life annuitants will now receive the cash in time for Christmas.
In June 2011, the Treasury began distributing compensation to Equitable Life policyholders who annuitised after 1992. It is being operated by National Savings & Investments, which has paid out £734m of a total £1.5bn provision for payment to policyholders.
In April this year, the National Audit Office warned the Government it should extend the deadline to pay policyholders because it was too short, and the Government had failed to prepare sufficiently beforehand.
In July the Public Accounts Committee chair Margaret Hodge slammed the ‘unacceptable’ Treasury handling of the scheme and claimed up to 20 per cent of policyholders could miss out.
The Government has since extended the payout deadline from April 2014 to April 2015 to ensure people are compensated..."
Money Marketing, by Samuel Dale 11 Dec '13
Equitable Life plan extended by a year
The £1.5 billion Equitable Life compensation scheme has failed to track down more than 400,000 account holders, prompting the Government to extend it for at least another year.
Sajid Javid, Financial Secretary to the Treasury, said yesterday that the Government was poised to run a national advertising campaign aimed at prompting eligible policyholders to come forward.
Hundreds of thousands of investors risk losing out on payments that average £1,339 but could be considerably higher because the mutual pension provider supplied incorrect contact details or no address at all to the scheme's administrators. In some cases, the address details handed over were 20 years old, the Treasury said.
The Equitable Members Action Group, the campaign group that led the call for financial redress, offered the department an up-to-date CD with 250,000 correct names and addresses two years ago. However, the Treasury refused to use it amid concerns that it would breach rules on confidentiality and privacy.
The campaign, which will feature advertisements online and in newspapers, will start in the next few weeks, the Equitable Life Payment Scheme said yesterday.
Mr Javid said that the scheme would be extended until the middle of 2015. It had previously been expected to close next April.
‘The Government has allocated up to £1.5 billion to help the policyholders of Equitable Life who suffered an injustice, with hundreds of thousands of policyholders receiving £700 million in payments since 2011,’ he said.
‘We've made strong progress, but we want to maximise the number of people who will eventually receive payments.’…
Paul Weir, a spokesman for EMAG, said that the group had pressed for the scheme's deadline to be abandoned, including at a meeting of the all-party group of MPs working on behalf of policyholders.
Mr Weir said: ‘We are delighted that the Treasury has listened to EMAG and the all-party group. It is vital that the Treasury complete the task of tracing those who are entitled to compensation and we will be working with them to assist that process,’"
Miles Costello in The Times 10 October, 2013
From the oral evidence session of the Public Accounts Committee (PAC) on 15 May, 2013:
Committee Chair Margaret Hodge MP to Mike Williams, Director, Business International Tax and the Treasury's senior responsible officer for the Equitable Life compensation scheme:
Q 74: "Mr Williams, you are just not getting what we are saying. Unanimously round this table we think individuals have the right to understand how their calculation was made. We will come to the timing. We think they have that right, and we are pretty cross with you that you are not administering a scheme that gives them that right. We think you should go and sort that out and just make sure that from here onwards people can get some understanding of why a particular sum was reached.
It is not very difficult. I just don't believe there is anything in the world that has to be so complex that people don't understand how you got there. I just don't buy that-I don't think any of us buy that. You can take that as a comment. It will be a recommendation, and you will be back here if you don't implement a scheme that allows that to happen."
Read the uncorrected transcript of the oral evidence session 15 May to the Public Accounts Committee
Read Ian Cowie's article in the Daily Telegraph, 16 May
£1.5bn payout chaos to Equitable Life policyholders is truly shameful.
The Mail on Sunday has long known that the £1.5billion payout to just over a million Equitable Life policyholders hit by the near-collapse of the insurer 13 years ago is being badly handled.
Rarely a week goes by without correspondence from at least half a dozen Equitable customers. All of them are elderly, many frail, and all complain they have either not received compensation, or if they have it is less than expected. Most of those who have challenged National Savings & Investments, which is handling the payments for the Treasury, complain of a robotic response to correspondence and complaints, with specific queries ignored.
The financial services industry is renowned for substandard customer service, so we should not expect any better from NS&I, but this is an appalling way to treat elderly people.
The National Audit Office last week confirmed the scale of this mess when it said that more than 660,000 payments had yet to be made (the intention was to make all payments by March next year) and that only a paltry 0.02 per cent of members of group pension schemes (where Equitable was the investment manager) had received compensation. More worryingly, it predicts between 17 and 20 per cent of policyholders eligible for compensation will never get their money because NS&I won't be able to track them down (presumably because they have moved).
Understandably, the report's findings provoked a furious response from policyholder pressure groups and some MPs who have campaigned for justice for Equitable Life policyholders.
Paul Weir of the Equitable Members' Action Group said it was inexcusable that so many savers had died before a penny of compensation was forthcoming while senior Tory MP David Davis implored the Treasury to do more – primarily kick NS&I up the backside – to ensure Equitable savers are "treated as fairly as possible, after what has been a miserable experience for them".
Margaret Hodge, chairwoman of the Commons Public Accounts Committee, said it was ‘disgraceful’ so many savers would not receive compensation because of NS&I's failure to find them. ‘These conscientious savers should not lose out,’ she said.
I do now hope the NAO report spurs the Treasury and NS&I into overdrive. It is bad enough that policyholders were kept waiting more than a decade before Government acknowledged they had a right to compensation.
But to dangle compensation before their eyes and not hand it over is truly shameful.
Jeff Prestridge in the Mail on Sunday, 28 April, 2013
Payouts at last for 9,000 victims of maladministration at Equitable Life
George Osborne corrected a major financial injustice last week when he said about 9,000 victims of maladministration at Equitable Life would receive compensation after all, totalling £45 million.
They were controversially excluded from a £1.5?billion rescue package announced in 2010 to make good some of the losses policyholders suffered after the failure of previous governments and regulators to monitor the insurer, resulting in its near–collapse in 2000.
The Government's U–turn follows a sustained campaign over two–and–a–half years by Financial Mail to win justice for the 9,000, many of them now elderly and frail. Some, sadly, have died waiting in vain for justice.
Compensation of £5,000 will be paid to those who took out with–profits annuities with Equitable Life before September 1992 and who previously were excluded from recompense. A further £5,000 will be paid to those annuitants who are relying on Pension Credit to help them get through retirement.
Under the 2010 package, only post–September 1992 annuitants were eligible for compensation because the Government deemed them to have suffered from the fallout from maladministration while it argued unconvincingly that pre–September 1992 annuitants had not lost out, precluding them from handouts.
But work done by a former appointed actuary at Scottish Widows on behalf of the Equitable Life Members' Action Group disproved this division, confirming that all annuitants, irrespective of when they took out their policies, had suffered from maladministration.
Views on the compensation offered by Osborne among pre–September 1992 annuitants varies. Tony Fisk, 82, a retired entrepreneur from Southend–on–Sea, Essex, has seen the income from his annuity decline by 60 per cent since he took it out in October 1989. He is ‘appalled’ by the offer of a flat–rate £5,000 compensation. "It's a bone. It's a gesture, nothing more," he says.
Peter Beresford, 86, former director of a major food distributor, says the £5,000 is welcome. Peter, from Littlehampton, West Sussex, has watched his with–profits annuity diminish from just over £5,000 a year in 1991 to below £2,000.
Peter says: "I had given up hope that our just calls for compensation would be heard. I suppose something is better than nothing. I just hope that compensation is paid swiftly because none of us is getting any younger."
Mail on Sunday, by Jeff Prestridge 24 March, 2013.
Equitable Life investors to receive compensation
Policyholders with life insurance firm who bought with-profits annuity pensions before 1992 to be given at least £5,000.
A new wave of pensioners who suffered from the collapse of life insurance firm Equitable Life in 2000 are to be offered up to £10,000 each in compensation. The £45m payout will be funded using some of the extra money raised through increasing national insurance payments on members of defined benefit pension schemes.
Chancellor George Osborne said the government was under no legal obligation to make the payouts. "We are doing this because it is simply the right thing to do," he said.
Policyholders who bought with-profits annuity pensions before 1992 will receive payments of £5,000 with an additional £5,000 offered to those on lower incomes who receive pension credit.
Previously, only those who bought policies after 1st September 1992 were eligible for compensation.
Only living victims, not their estates, will get the payments, which will be made in 2014, or earlier if possible. Fewer than 10,000 people are expected to receive the latest round of compensation.
Paul Braithwaite, general secretary of Equitable Members Action Group, said: "Of course, £45m for those who had been left swinging in the wind is welcome. It is a little oasis of good news for old and frail people."
But Braithwaite said that the pensioners, now in their 80s, should have been compensated some time ago and the payout would only cover about 30% of their losses. He said even those who had previously been promised a payout were suffering from delays in the process...
The Guardian, Sarah Butler 21 March, 2013
Victims of the insurer's collapse are still waiting for their compensation from the Government...
The Treasury claimed it has paid nearly 80pc of individual policyholders and aims to have compensated all victims of the scandal before the end of next year. It is part of a £1.5bn compensation package agreed by the Government in October 2010.
But Paul Weir, a spokesman for the Equitable Life Members Action Group (EMAG) said that half of all the with–profits annuitants were still waiting for compensation.
"It beggars belief that the scheme has only managed to pay 6,000 with-profits annuitants since last July and left another 6,000 completely in the dark, waiting anxiously for the postman. We are fielding hundreds of inquiries from worried elderly annuitants, who cannot understand why they have not been contacted by the compensation scheme."
He added that while 80pc of individuals may have had a payment, the size of this compensation accounted for only one fifth of what they had lost. He also said that the vast majority — some 99pc — of those who invested in Equitable Life through a company pension scheme waiting to hear from the scheme. Around 500,000 bought Equitable Life pensions through a work-based scheme...
the Treasury's third progress report on the Equitable Life Payment Scheme said:
"Some 339,794 non with–profits annuitants have received lump sum payments totalling £426m and 30,997 with–profits annuitants have received their first payment totalling £54m.
"The scheme has also made payments to the estates of 5,760 deceased policyholders and continues to identify, trace and contact estates."
But Mr Weir said:
"We have also seen hundreds of the complaints sent to the scheme by policyholders who cannot understand how the figures were arrived at. They are met with a wall of obstruction and the handling of customer complaints so far has been abysmal."
Sunday Telegraph, 18 February 2013, by Ian Cowie
"...The Treasury's third progress report on the Equitable Life Payment Scheme, published today, acknowledged that nearly 6,000 compensation payments have been sent to the estates of deceased policyholders. It also claimed that many have received redress and the compensation programme is running to schedule.
A Treasury spokesman said: ‘Some 339,794 non with–profits annuitants have received lump sum payments totalling £426m and 30,997 with–profits annuitants have received their first payment totalling £54m...’
But Paul Weir, a spokesman for the Equitable Members' Action Group (EMAG), said: ‘It beggars belief that the scheme has only managed to pay 6,000 with–profits annuitants since last July and left another 6,000 completely in the dark, waiting anxiously for the postman...
‘Meanwhile, 99pc of more than 500,000 people in group schemes are still waiting to hear from the scheme. We have also seen hundreds of the complaints sent to the scheme by policyholders who cannot understand how the figures were arrived at. They are met with a wall of obstruction and the handling of customer complaints so far has been abysmal.’
Ian Cowie, Daily Telegraph 6 February, 2013
About minister Sajid Javid MP
"...Javid oozes self–confidence. You don't go from growing up in one of Bristol's poorest streets to being a vice–president of Chase Manhattan at the age of 25 without a lot of self-belief. He has no doubt that he can do the ministerial job. He is also not unaware of his own political advantages: ‘Because on my background and the challenges I have had and the job I have done before, I have worked with and had friends from every group of society. I don't think that's true of all politicians and that hopefully helps me empathise and connect with people facing problems at any point on the social ladder, whether they're a bus driver or an investment banker. I understand the issues and concerns they're facing."
James Forsyth in The Spectator: 24 Jan 2013
There is no doubt that Sajid Javid is one of the Government's rising stars. Recently appointed as Economic Secretary to the Treasury to become George Osborne's right–hand man, some say the former banker who became an MP in 2010 ‘to help people’ is destined for political greatness.
That may well turn out to be the case, but Javid's credentials as a man of the people will certainly be tested in the next couple of months when he has to make a couple of key decisions affecting thousands of lives...
Last Thursday, representatives from the Equitable Members' Action Group, organisers of Wednesday's event, met Javid to call again for proper compensation. Let's hope Javid, a man of the people remember, will oblige by lancing the Equitable Life boil once and for all and paying these elderly victims the compensation they deserve.
Jeff Prestridge, Mail on Sunday, 28th October 2012
EMAG argues that denying payments sends out the worst possible signal when the Government is introducing its compulsory workplace savings schemes in an attempt to push people to save more. "After what happened to us, how can anybody have confidence that their money will even be there for them when they come to retire?" Mr Weir said. "Unless the Government shows it is prepared to do the right thing for people who tried to save responsibly for their own retirement, my advice is: Don't bother."
Miles Costello, The Times 22 October, 2012
Policyholders are still waiting for details of compensation
HUNDREDS of desperate Equitable Life policyholders are still waiting for details of their compensation months after it was promised. Last year the government said £1.5 billion would be paid to almost one million victims of the insurer's near–collapse more than a decade ago and promised that confirmation of their expected payout would be sent out by the end of June...payments are being made in no particular order — neither alphabetical nor according to when the policy was bought — and some people have been told they may have to wait until April 2014 for their money...
Sunday Times, 30th September, 2012
Barely a day goes by without Financial Mail being contacted by an Equitable Life policyholder distressed that they have yet to receive a penny of compensation promised under a £1billion-plus scheme put together by the Government in late 2010.
Most are elderly, distressed and desperate for the compensation that they thought they would have received by now. They feel cheated — and quite rightly so.
The group of policyholders suffering the most are those who bought ‘with–profits’ annuities with Equitable Life and who have seen their retirement income slashed over the years as a result of the mutual's board taking drastic action to stop the business from bankrupting itself.
Although these policyholders were meant to be given priority under the scheme arrangements, they haven't been.
According to the Equitable Members' Action Group, 30 per cent of them have yet to receive any compensation — and that is pushing to one side the Government's spiteful decision to exclude 10,000 annuitants (pre–1992 annuitants) from compensation altogether on spurious grounds.
Mark Hoban, Financial Secretary to the Treasury, seems to think all is going well with the distribution of compensation, but he is living in cloud cuckoo land.
Older people who saved hard for their retirement, only to be let down byn a breakdown in regulatory scrutiny at Equitable, are being let down a second time.
Compensation should be paid promptly to those most in need — and in the case of Equitable annuitants to all victims, not just a proportion of them determined by some bean counter in a Treasury back office.
Mail on Sunday 29th July, 2012 By Jeff Prestridge
Equitable Lifers fear payout delay
Victims fear they won't receive their compensation by the June deadline.
Policyholders with the collapsed life insurer Equitable Life fear that the Government will miss its June 30 deadline for all affected people to receive details of their compensation.
More than a quarter of a million payments have been made to date, but the Equitable Members Action Group (Emag) said that, with only four weeks to go, the Treasury has a lot of ground to make up. Around a million people need to be contacted with a statement explaining whether they will get compensation, how much they will receive and when they can expect it.
The Treasury has seen a massive surge in complaints this year because of the Equitable redress scheme. Chloe Smith, the economic secretary to the Treasury, said in a parliamentary written answer that the Treasury had had 382 complaints in the financial year ending in April 2012. In the previous year it received just one, she said. All but one in 2011/12 relate to the Equitable Life Payments Scheme.
Paul Weir, chairman of Emag (sic), said many policyholders were deeply disappointed by the cheques they were receiving, and that many had merely received letters asking for proof of address. He added that many policyholders found it difficult to work out how their losses had been calculated from the letters that they received.
Telegraph 2 June 2012.
We were forced to sell our home
As two victims of the Equitable Life scandal we endorse Mr Downes' call for proper compensation from the Government.
The effect of the admitted mis–regulation by the Government has been catastrophic on our lives. We worked for and saved for over 50 years and have seen our pensions fall from £5840 pa to £2963 8 years later. This fall of 50% is made worse by rising inflation every year.
In 2001 we were forced to sell our Cotswold home and move into a mobile home because our pension had been savaged. Today the annual fall in our income and the rise in inflation have really struck our living standards. My wife and I are now nearly 80 yrs old and I do not have good health and I am worried how she will manage if I die since she will then receive only two-thirds of a falling pension… if there is any let?
I worked until I was 65yrs old including 5 years in the RAF. We were brought up to be responsible citizens and save even though we were raising 2 children. We relied on the Government guarantee that our pension was regulated.
The Government has after 10 years now admitted liability for the collapse of our pension provider. They say by their own calculations victims are owed £4.5bn but refuse to fully compensate us for our losses and will pay an average of 22%. My wife and I will get NOTHING because we took our pension on the 31 August 1992. Had we taken it ONE DAY later we would get 100%. The Treasury has deliberately ignored the specific recommendation of the Parliamentary Ombudsman to include the 10,000 pre–September 1992 pensioners in the compensation scheme. We and many thousands of other are too old to make up this shortfall in our pensions.
The politicians have quickly forgotten the pre-election promises and Queens Speech which promised victims proper compensation. Our MP (Sajid Javid) has been polite but no effective help. At a public meeting of victims he said ‘I don't need your votes’. It is this callous disregard for people that contributes to the increasing loss of faith in our democratic process. Many fellow victims will die before they get the final part of their derisory compensation in 5 years' time.
We know that the money is there for projects the Government wish to support. The Olympics will cost at least £9 bn, 4 times the original budget. This huge expenditure will regenerate part of London but will not benefit other parts of England. We cannot afford to visit our grandchildren 100 miles away let alone go to London. Billions are also printed to support banks here and abroad.
Mature Times 19 March 2012
Nine in ten victims of the Equitable Life scandal who are owed compensation have still not been paid, according to official figures
Equitable Life row over pay delay for policyholders owed compensation. Nine in ten victims of the Equitable Life scandal who are owed compensation have still not been paid, according to official figures. The Treasury said more than £70m has been paid to 96,000 policyholders who lost money after the Equitable nearly collapsed in 2000. But it means that around 90 per cent of the 982,000 victims have yet to be compensated since the payments started in June last year.
The Treasury last month moved to speed up the process amid mounting anger from campaigners. Paul Weir of the Equitable Members Action Group said: ‘The Treasury failed to put the people in place to be ready to start properly in June 2011, which is why they are having to run so hard to catch up. Elderly pensioners are dying while they dither.’
The near–collapse of Equitable, once regarded as the best managed private pension company, is the longest running financial scandal of recent times. After a decade of wrangling under the last government, the Coalition promised to pay £1.5bn to victims.
The figures show that 11,000 of the 37,000 with profits annuitants, or 30 per cent, have received a total of £9.3m. But only 85,000 of the remaining 945,000 policy holders, or 9 per cent, have received payment.
EMAG's Paul Braithwaite added: ‘For many this is a case of too little too late. Victims were promised by the Coalition that compensation would be fair, swift and transparent — it's none of those things. We have heard from the partners of a number of annuitants who have died before receiving anything.’
Daily Mail, 6 February 2012
Equitable Life redress ruling ‘unfair’
The Government's decision not to compensate Equitable Life members who annuitised before 1992 was unfair and wrong, according to and Pensions select committee member Andrew Bingham.
In June, the Government began distributing £1.5bn of compensation to those who annuitised after 1992. It chose the cut-off date because before then there was no maladministration in the firm which, if spotted by the regulator, could have affected policyholders' investment decisions.
But speaking to Money Marketing at the Conservative Party conference last week, High Peak MP Bingham said the 10,000 people who annuitised before the cut-off date should have been included.
He said: ‘When the vote came through the House of Commons I voted against the Government because I thought the pre–1992 annuitants should have been entitled to compensation. There were a few of us who thought the same, but not enough.
‘Even though their losses were not the result of regulatory failure, I think it was unfair and wrong to exclude them. A lot of Equitable Life policyholders feel the Government's solution is not as they would wish.’
Under the compensation scheme, £620m will go to 37,000 with–profits investors compensating them for relative losses. Two–thirds of the money is expected to be paid out by 2015.
Money Marketing, by Steve Tolley 13 Oct 2011
‘Unfair’ Equitable compensation scheme under pressure
The Government is under renewed pressure to review its controversial decision to exclude more than 10,000 Equitable Life customers from a £1.5 billion compensation scheme it launched earlier this year.
It follows publication of an independent report by an eminent actuary for pressure group Equitable Members Action Group (EMAG) that says their exclusion is both unfair and unjustified.
The report, written by David Forfar, a fellow of the Faculty of Actuaries and former appointed actuary for Scottish Widows, looks into the treatment of Equitable Life customers who hold with-profits annuities with the mutual.
When the Government drew up details of the compensation scheme, it decided to divide the 47,000 annuitants into two camps.
The 37,000 who took out their policies from September 1992 onwards were promised full compensation to cover their losses resulting from the failure of regulators and past governments to monitor effectively the mutual.
Not being able by law to transfer their annuities, these customers, says the Government, suffered savage cuts in their income after Equitable took action to avoid bankruptcy.
But earlier annuitants were offered no compensation as they had already benefited from unusually high income payments as a result of the mutual's willingness to pay large bonuses to attract new business. These overpayments, the Government argued, more than made up for subsequent losses.
Forfar concludes that it is ‘unfair’ to compensate just one group of annuitants and says the over-bonuses were ‘insignificant’.
On Friday, EMAG's Paul Weir said the Government should offer compensation to the 10,000 annuitants — many in their 80s — before ‘it is too late’...
The Treasury declined to comment.
Mail on Sunday, by Jeff Prestridge 25 September, '11
Fury as only 321 Equitable policyholders are paid
More of its oldest policyholders could die before they received payments, the Equitable Members' Action Group said Equitable Life campaigners renewed their attack on the Government's compensation scheme yesterday as it emerged that only a fraction of eligible policyholders had received payments.
The Treasury has pledged to pay out £1.5 billion in compensation to about one million Equitable policyholders, who saw the value of their savings fall by as much as 60 per cent when the mutual almost collapsed more than a decade ago. After a concerted campaign by action groups, the Treasury has agreed to pay out £500 million of this by next April and to contact all eligible customers by June. The average payout for policyholders is expected to be between £800 and £1,000.
But it has emerged after a freedom of information request that, as at the start of this month, only 321 payments had been made from the scheme.
The Equitable Members' Action Group, which has been fighting for more than a decade for policyholder recompense, said it feared that the Treasury was stalling. More of Equitable's oldest policyholders could die before they received payments, EMAG said. The group has dismissed the size of the payouts — worth slightly more than a fifth of customers' losses — as derisory.
Paul Weir, the EMAG spokesman, said: ‘They're going to have to ramp things up spectacularly to turn an annual rate of 3,700 into one million.’;
Paul Braithwaite, the general secretary of EMAG, said that the group, which has more than 40,000 members, had been contacted by many anxious policyholders wondering why they had heard nothing.
‘EMAG is having to be the frontline service because the Treasury has created a vacuum by not communicating anything to the million policyholders acknowledged as being eligible for compensation,’ he said.
A spokesman for the Treasury said that it was deliberately starting slowly to ensure that its complex payment mechanism worked properly and that payments would speed up soon.
The Times, by Miles Costello 18 August, 2011
Equitable saga ends, but the shame lives on
After more than a decade of demonstrating outside Parliament, lobbying MPs, pressing Governments (past and present) and taking their case to Europe, some Equitable Life policyholders actually began to receive compensation last week.
This follows a commitment by the Government to pay out £1.5 billion over the next three years to victims of the debacle that saw the mutual insurer totter to the verge of extinction in 2000 and policyholders' investment plans subsequently ravaged to rescue it from bankruptcy.
The Government should be applauded for recognising the financial discrimination that many Equitable customers have suffered because of the failure of regulators to keep an eagle eye on the insurer during the Eighties and Nineties.
But let's not kid ourselves that this is a happy end to one of the most shameful episodes in the financial services industry over the past decade — because it clearly is not. For a start, the compensation being paid is a fraction (one-fifth) of what stalwart campaign groups such as Equitable Members' Action Group claim is due.
Indeed, EMAG, guided by the magnificent Paul Braithwaite, will continue to campaign for a bigger compensation package. I would not expect anything else from Braithwaite and his team, but I expect they will be flogging a dead horse given the straitened times in which we live.
Second, the Government has excluded from compensation about 10,000 (pre-September 1992) with-profits annuitants on what can only be described as spurious financial grounds.
Mark Hoban, Financial Secretary to the Treasury and mastermind of the compensation scheme, should review this decision as a matter of urgency because it is clearly wrong.
But worst of all, what is most damning about this whole affair is that more than 50,000 Equitable Life policyholders have died while vainly waiting for compensation to come their way.
Parliament and Gordon Brown in particular (the former Prime Minister, more than anyone else, prevaricated on the issue of compensation) should hang their heads in shame.
Mail on Sunday, Jeff Prestridge. 3 July 2011
Equitable Life: An object lesson in how to fail at financial regulation
This will not be the end of the campaign for justice by Equitable savers — and we should not pretend that they have had anything but a raw deal.
Everyone will welcome the promises made this week by those who will run the new Financial Conduct Authority, which replaces the Financial Services Authority next year. It swears it will not repeat the mistakes made by its predecessor over the past decade and beyond.
Let us hope that proves to be the case — for as we are reminded today, the legacy of financial scandals can be enduring. The good news is that 11 years after the collapse of Equitable Life, the Government is finally going to start doing the right thing by the tens of thousands of affected savers. It would be churlish to note that ministers have cut it very fine on their commitment to dispatch the first compensation cheques to victims of the Equitable scandal by the end of June — at least those cheques, going in the post today, have finally been signed.
However, this will not be the end of the campaign for justice by Equitable savers, and we should not pretend they have had anything but a raw deal — certainly collectively and, in the vast majority of cases, individually too.
It was a surprise to many that last year's Coalition agreement explicitly recognised the repeated rulings by the Parliamentary Ombudsman that Equitable savers were let down by the regulatory system.
That the agreement's commitment to compensate the losers in full was subsequently reneged upon was more predictable. The failings in this package are numerous. Despite their long wait, savers will get their money back in dribs and drabs over the next three years, rather than upfront. Inevitably, that means yet more Equitable victims will die before having received the compensation they are owed.
Then there is the fact that thousands of Equitable savers are missing out altogether on redress. The terms of the pay-out exclude policyholders who did not begin saving during a narrow period of time: that will cost at least 10,000 victims of the scandal.
Even those who are being compensated will be disappointed with the cheques they receive. To put it politely, not many people agree with the formula for calculating losses that ministers drew up.
The best we can say about today's pay-outs is that this shoddy episode is finally drawing to a close. The disastrous, long-term results of a basic failure in regulatory practice should be studied by everyone now preparing for the next era of consumer protection in the financial services industry.
Independent, David Prosser 30 June, 2011