Equitable Life: 200k set to be let down by the Treasury
By Phoebe Cooke
Over 200,000 Equitable Life policyholders may never receive any compensation payments from the coalition because of Treasury incompetence, MPs have warned.
A report from the Commons' public accounts committee blamed the government for its "failure to get a grip" on the scheme, which will close by March 2014 at the latest.
Committee chair Margaret Hodge branded the Treasury's failure to pay out to policyholders "completely unacceptable" and accused it of "failing to learn the lessons of the previous government".
Equitable Life collapsed in 2000, leaving thousands of policy holders without the compensation they had been promised.
Regulatory malpractice was attributed as the reason for the crisis but the Labour government resisted attempts to provide compensation for those who had lost out.
In 2010 the Treasury was authorised by the new coalition government to make compensation payments but today's report reveals it has fallen well short of its targets in compensating the victims.
"Hundreds of thousands of conscientious savers are losing out because of the Treasury's failure to get a grip on the payment scheme," Hodge said.
"It focused on an arbitrary target for making the first payments at the expense of proper planning and this has led to unacceptable delays and spiralling costs."
Hodge added that by March 2012 only £168 million had been handed out – a third of the expected £500 million.
Only 35% of policyholders had received payment despite 72% of the budget being spent.
The matter is complicated by the fact that 300,000 policyholders have died since the compensation scheme began, although the Treasury insists that some headway has been made in this respect.
"The scheme has also confirmed that the estates of some 8,000 deceased policyholders have been paid and the process of identifying, tracing and contacting the estates of deceased policyholders continues," Sajid Javid, economic secretary to the Treasury said back in May.
His comments followed the news that the Treasury had destroyed a disc containing 350,000 Equitable Life victims' details.
Hodge said it was bizarre that the Treasury had not yet publicised the closure of the scheme before, and urged them to do so.