The Financial Secretary to the Treasury (Mr Mark Hoban)
For almost a decade Equitable Life policyholders have fought for a just resolution in relation to losses suffered as a result of regulatory failure. Since 2000 there have been extensive investigations and reviews into what went wrong at Equitable Life. It has been established that maladministration on the part of the Government of the day occurred, and agreement that payment should be made in relation to losses suffered as a result, but the process has taken far too long.
Today, I am confirming this Government’s pledge to making fair and transparent payment to Equitable Life policyholders, through an independently designed payment scheme, for their relative loss as a result of regulatory failure. We will set up an independent commission to determine the design of the scheme. While we appreciate the need to implement a payment scheme quickly, the impact and implications of events in relation to Equitable Life are complex, and it is important that our approach is thorough, transparent and fair. As the ombudsman accepted, we also recognise that the impact of any scheme on the public purse must be taken into account.
I would therefore like to provide an update on the steps we will be taking from here.
In yesterday’s Queen’s Speech, the Government announced that they will take an important step forward by introducing a Bill to enable payments to be made to Equitable Life policyholders.
The previous Government asked former Lord Justice of Appeal Sir John Chadwick to provide independent advice on losses suffered by Equitable Life policyholders due to Government maladministration. Sir John was due to present his final report to the Government in May.
We will allow Sir John to complete his work and submit his final report to HM Treasury. Sir John’s work brings together over a year of extensive evidence gathering and detailed analysis, including input from a wide range of interests. This work will be useful in helping to inform the development of the payment scheme.
Sir John has requested, and the Government have agreed to, a short extension to this timetable in order to take fully into account two important developments. First, Sir John would like more time to respond to issues raised by the independent actuarial panel appointed to examine the assumptions and methodology used in this provisional advice to him. Secondly, because there has been a significant evolution in his work since his third interim report, Sir John would like to discuss his views with stakeholders before completing his report.
Sir John’s final report will be provided to the Treasury by mid July. While Sir John finalises his report the Government will consult with others on the next stage of the process.
The Government will publish Sir John’s report alongside a detailed update, giving next steps towards implementing an independently designed payment scheme. While we believe the design of the scheme should be developed by an independent commission, I can confirm that we are clear about two key points: that there should be no means testing; and that the dependants of deceased policyholders should be included in the scheme.
I am very aware that there is, understandably, substantial concern in relation to Equitable Life. The Government are working hard to address the situation as quickly as possible, in order to ensure the establishment of an independently designed payment scheme that is transparent and fair to both taxpayers and policyholders. The steps we have announced today are a sign of our commitment to deliver on that pledge.