Equitable Life Policyholders: Compensation

Debate between Bob Blackman and Robert Neill

Thursday 23rd March 2017 Commons Chamber

[Bob Blackman]

Indeed. Unfortunately, as we know, many of the individuals affected by the scandal are deep into old age. They may be very vulnerable, and, regrettably, there are fewer and fewer of them every day. For every day that goes by without them receiving proper compensation, the scandal is maintained.

[Robert Neill (Bromley and Chislehurst) (Con)]

My hon. Friend just made an important point about the significance of London’s international reputation. That depends, in part, on the strength of our regulatory environment. Does it not follow, as a matter of both good policy and common decency, that when there is a massive regulatory failure, the Government should be seen to stand behind those who lose out as a consequence?

[Bob Blackman]

I absolutely agree with that comment. I want to say something about the commitments we have made, which are very important. As I have said, the former Chancellor accepted the reality of the situation at the Dispatch Box. He said:

“I accept the findings of the parliamentary ombudsman in full.”—[Official Report, 20 October 2010; Vol. 516, c. 960.]

Let us be clear about the parliamentary ombudsman’s findings at the time. There had been 10 years—a decade—of regulatory failure, which was responsible for the losses suffered by pensioners when Equitable Life collapsed. In her report, which was 2,872 pages long by the way, she recommended that the Government

“should restore complainants to the position they would have been in, had maladministration not occurred”.

I believe that we should ensure we honour the commitments we have made and honour the situation in law.

I note that my hon. Friend the Economic Secretary is a former member of the all-party group and a strong supporter of justice for the Equitable Life policyholders. I know him to be an honourable man, and I know he will want to do the best he can for the people who have suffered such losses.

The ask today is very simple. The pre-1992 trapped annuitants, who are the most vulnerable group—I am afraid that, every day, fewer and fewer are with us any longer—should be compensated in full, even though that is outside the scope of the legislation. Full compensation for those individuals would cost the Government less than £100 million. For the people who have received compensation for 22.4% of their losses, a plan should be set out to enable them to receive full compensation. I am not expecting that to happen straightaway—it may take time—but those people should receive compensation as the economy recovers. We could have a plan so that, in line with the recovery of the economy, much more money is paid out. That would fair, reasonable and—dare I say?— equitable.

In conclusion, I look forward to my hon. Friend giving us some commitments and clear guidance on what the Treasury will do to assist people who invested and did the right thing. This House owes a debt of honour to those individuals, and those of us who support these honourable people will not rest until such time as they receive every penny piece of the compensation to which they are entitled.

Equitable Life

Debate between Bob Blackman and Robert Neill

Thursday 11th February 2016 Commons Chamber

[Bob Blackman]

I thank my hon. Friend for that clear statement.

There are three sets of policyholders: the pre-1992 trapped annuitants, who were to get not a single penny under the compensation scheme; the with-profits annuitants, who were to get 100% compensation; and the pension holders, who got 22.4% of their relative losses, as my hon. Friend said. The coalition Government set up a compensation scheme, which I was pleased to support. However, it is a scandal that if someone purchased their policy on 31 August 1992, they got nothing, but if they purchased it on 1 September 1992, they got 100%. The rationale was that if the pre-1992 trapped annuitants had looked at the regulated accounts, they could have seen that there was a problem and that it was a scam. The reality is that when people sign up to such schemes, they do not expect to have to do that. I applaud the Government for taking steps, following the legislation, to partly compensate the pre-1992 trapped annuitants.

[Robert Neill (Bromley and Chislehurst) (Con)]

My hon. Friend has done great work with the other members of the all-party parliamentary group. I apologise, Madam Deputy Speaker, for the fact that, as you know, for a number of reasons I will not be able to stay for the whole debate. Many of my constituents were victims of this scam. Does he agree that when there has been a failure of regulation, as there was in this case, the Government essentially stand behind the regulator, so the moral responsibility ultimately falls on the Government, regardless of party? Although the coalition did something, the financial constraints that enabled it to argue that it was not able to do as much as we would have wished at that time are beginning to ease. Do not decency, honesty and equity demand that we revisit the amount of compensation that is due to these people, who saved and did the right thing, and who, frankly, have been let down by Government agencies as much as by Equitable Life?

[Bob Blackman]

I thank my hon. Friend for that clear conclusion.

The Government allocated £1.5 billion of compensation to policyholders who had lost money. Some £45 million was then promised and delivered to the pre-1992 trapped annuitants. The Chancellor accepted at the Dispatch Box in November 2010 that the total loss was some £4.1 billion, so the shortfall in compensation is £2.6 billion.