MPs criticise Equitable Life plan

By staff

MPs have criticised the government’s plan for Equitable Life victims as “morally unacceptable”.

The public administration select committee said it is “deeply disappointed” with the government’s response to the parliamentary ombudsman’s report on Equitable Life.

According to the committee’s report, Justice Denied?, the government chose to “act as judge on its own behalf” by rejecting some of the ombudsman’s central findings.

The government has admitted some responsibility for the regulatory failings that led to the near collapse of the firm, leaving thousands of savers out of pocket.

However, it has claimed that compensation to all policyholders is not warranted.

“This may be a legally valid position,” the group of MPs said, “but we think that most people would consider it to be a morally unacceptable one.”

The government has appointed a judge to decide how compensation could be distributed to policyholders.

Committee chairman Tony Wright said: “I give credit to the government for apologising, for producing a considered response, and for accepting the need for some kind of payments scheme.

“But the government has produced an essentially political response to a quasi-judicial investigative report from the Ombudsman, and as a result has ended up satisfying nobody.”

Equitable Life came close to collapse in 2000, wiping much of the value from the policies of one million savers.

The parliamentary ombudsman, Ann Abraham, investigated the regulators role in the firm’s failure and concluded the government should take some of the responsibility and compensate policyholders who lost out.

However, the government has denied some of the findings and will only be paying out part of the compensation.