An Equitable Life?

I BELIEVE that those affected by the maladministration and regulatory failure at Equitable Life should receive fair compensation.

For any individual investing for their retirement to have their savings slashed through no fault of their own is a tragedy — I have received many letters from people who have saved responsibly only now to fall on desperate times.

When you consider that there are 1.5 million policyholders then tragedy becomes catastrophe.

The scale multiplies the misery but it also creates a national economic dimension. This is not just about personal loss but about trust on a grand scale.

Trust between government (who failed to regulate) and investors (whose savings evaporated). The implications for weaning people off credit and back into the habit of saving are therefore profound. So the government has both a moral duty to individuals and a practical duty to all of us to provide fair compensation and so encourage a responsible savings culture.

The Parliamentary Ombudsman who investigated the issue of maladministration concluded that payouts should take into account the state of the public finances. Sir John Chadwick concluded after consideration of so-called 'relative losses', ie, the losses policyholders faced relative to returns they would have achieved had they invested in other companies, and an assumption that most policyholders would have stayed with Equitable even if maladministration where known about, has led to the possibility that payouts may be at a huge discount — perhaps up to 90%.

I believe that this outcome would be grossly unfair and that while Chadwick's analysis should certainly be considered, its conclusions on compensation should be rejected.

There will be a debate in the Commons this week in which I intend to press for the news in the Autumn to be good, fair and equitable.