Equitable Life

Baroness Laing of Elderslie Excerpts

Thursday 21st January 2021 Commons Chamber

[Tom Randall (Gedling) (Con) [V]]

I am grateful to the Backbench Business Committee for allowing this debate, and I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on securing it, and on his co-chairmanship of the all-party parliamentary group for justice for Equitable Life policyholders, which I have been happy to join. He very eloquently set out the background to this matter in his opening speech, and I associate myself entirely with his comments. As he said, this situation has its origins in unique circumstances, and as the parliamentary ombudsman found in 2008, the victims’ losses have been directly attributable to a decade of serious and serial regulatory maladministration.

These matters have been well covered so far, but I would like to make three brief points. The Equitable Members Action Group has raised doubts about the accuracy and reliability of the Treasury’s methodology, and how it has been used to calculate the compensation payments made. I hope that can be addressed in the interests of open government, so that concerns in that area can be resolved. I also note the action group’s call for a joint inquiry on payment accuracy by the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee. I am a member of the latter Committee, and I note that call. I am sympathetic to it, so that this can be looked into further.

This is a very technical matter, but I think we should look at the human side of it as well. A recent Prime Minister said:

“The British people are decent, sensible, reasonable and they just want a government that supports the vulnerable, backs those who do the right thing and helps them get on in life.”

That really sums up some of the Equitable Life victims I have met in Gedling. I have met only a small handful of the 2,300 victims and their dependants in my constituency, but they come across as quiet, unassuming people who do not want to cause a fuss, and tried to do the right thing, work hard, and make the right preparations for their retirement. It is time that we tried to address their valid concerns. Equitable Life had a series of adverts in the early 1990s that traded on the solidity of its investments. A 1993 commercial finished with the slogan, “You profit from our principles”. That appears not to have occurred, and I hope this is something that we can finally begin to address.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I would like to try to give everybody on the list a chance to speak. Therefore, with apologies to the right hon. Member for Orkney and Shetland (Mr Carmichael) for giving him no notice whatsoever, I now have to impose a time limit of three minutes.

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[James Murray (Ealing North) (Lab/Co-op) [V]]

As we have heard today, it has been more than 20 years since the House of Lords ruling rendered the Equitable Life Assurance Society financially unviable, and it has been over a decade since the then Chancellor announced the Equitable Life payment scheme to compensate policyholders who had lost out as a result of the scandal at that company, yet even after so many years, thousands of Equitable Life policyholders do not feel they have been treated fairly.

The Equitable Members Action Group continues to campaign tirelessly on their behalf, and during this afternoon’s debate—I congratulate the hon. Member for Harrow East (Bob Blackman) on securing it—we have heard Members from all sides passionately setting out the injustice that so many policyholders feel. My hon. Friend the Member for South Shields (Mrs Lewell-Buck) powerfully set out the upsetting case of the 84-year-old pharmacist she represents as an example of how the scandal has affected people living in constituencies across the country. My hon. Friend the Member for Newport East (Jessica Morden) spoke of the human impact on her constituent, an 89-year-old living with dementia, whose life has been hit by this scandal, alongside nurses, teachers, shop workers and so many others over many years.

My hon. Friend the Member for Coventry North West (Taiwo Owatemi) emphasised how long the scandal has been going on, and spoke about the crucial importance of transparency, which I will return to. The importance of transparency was also underscored by my hon. Friend the Member for Liverpool, Riverside (Kim Johnson), who spoke about the costs of the scandal on the plans and dreams of those affected, and the ongoing impact of current cases such as London Capital & Finance. My hon. Friend the Member for Putney (Fleur Anderson) spoke about a 91-year-old in her constituency and others who invested in good faith but have gone for decades without a satisfactory conclusion.

It is crucial that we learn lessons from what happened at Equitable Life, including about the wider importance of having a well-regulated financial services sector, as the right hon. Member for Gainsborough (Sir Edward Leigh) said. In recent months, the cases we have seen at London Capital & Finance and Brewin Dolphin underline the importance of the Government’s doing more to ensure that people are well protected in the first place.

On Equitable Life itself, the issue at the heart of the disagreement over the past decade has been how the payments to the vast majority of its policyholders have been determined. As we know, that has generated intense disagreement with the Government over their approach, and as today’s motion makes clear, there is a further issue of transparency and trust. Many policyholders lack confidence that those payments have been calculated fairly.

In October 2020, my hon. Friend the Member for Oxford East (Anneliese Dodds), the shadow Chancellor, wrote to the Chancellor of the Exchequer, asking for the Treasury to set out clearly the basis on which it had calculated the payments that had been made to policyholders and to ask what assessment his officials had made of the overall accuracy of the scheme. In his reply, the Chancellor claimed that when the Equitable Life payment scheme was operational, it was fully transparent, and that its calculations methodology was published in full. He claimed that the Treasury had worked with the Equitable Members Action Group and others to produce a simplified explanation for policyholders.

Unfortunately for the Chancellor, the Equitable Members Action Group does not share his assessment. It contends that the Treasury refused full disclosure and hid behind commercial confidentiality. The group had to attempt to reverse-engineer the calculations, and it remains unsatisfied that payments can be shown to be accurate. It has presented cases of policyholders who received an amount substantially less than they were due. In one of the most extreme examples, which the hon. Member for Harrow East drew attention to, it quotes a case where the Treasury calculated a policyholder’s loss at £17, only for that to be revised to £8,661 when challenged. More widely, the group cites a freedom of information request that revealed that, where compensation had been recalculated following complaints, it resulted in an increased payment to the policyholder in every case—on average, by a factor of three.

A report of the Public Accounts Committee, under its former Chair, my right hon. Friend the Member for Barking (Dame Margaret Hodge), concluded:

“Policyholders have struggled to understand how their payments have been calculated and cannot, therefore, check that the amount that they receive is correct.”

In a letter to the Committee’s current Chair, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), the permanent secretary to the Treasury restated the Government position. He said:

“no errors in the actual methodology have been found, including when the Equitable Members Action Group’s own actuary examined the methodology.”

Again, the group does not share the Treasury’s assessment. It contends that the actuary acting on its behalf was denied the information he needed to validate the methodology used, and he could not verify the calculations for one third of the sample policies studied.

It is the Government’s responsibility not only to do the right thing but to earn people’s trust that they will do so. It is clear from the continuing challenge presented by Members of Parliament on behalf of Equitable Life policyholders today that that is not yet the case. I find it hard to disagree with the Equitable Members Action Group’s view that the Treasury’s refusal to be fully transparent only increases suspicion that something is wrong.

After such a long-running disagreement, we believe that a transparent approach is the best way forward, and that it is the only way to find a way forward that is widely trusted and accepted. We therefore look forward to the response from the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee on this important call to establish a joint inquiry into the accuracy of payments made to victims of the Equitable Life scandal.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the hon. Gentleman and apologise to him that the timer has been put on. Can the timer please be taken off by whoever is controlling it? It is very distracting and it was not fair to Mr Murray to have those numbers apparently telling him he had to stop when he did not have to stop. I am sorry for that, but these technical hitches sometimes just happen.

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[Bob Blackman [V]]

With the leave of the House, I would like to thank the, I think, 25 Back-Bench Members from five different political parties who have contributed to this debate. In direct answer to my hon. Friend the Minister, let us be clear: £280 billion has been found to shore up the economy because of covid; less than 1% of which would provide full compensation to the victims who have been waiting more than 20 years for it. Equally, had Equitable Life been allowed to fail, the people who lost their money would have been entitled to 90% compensation under the industry scheme, but they were denied access to that scheme because Equitable Life was too big to fail.

The reality, as has been mentioned, is that the Treasury has hidden behind commercial confidentiality in terms of displaying and disclosing the information necessary for individuals to calculate the compensation they were due, even under the reduced scheme. In addition, the pre-1992 trapped annuitants, who are the most vulnerable victims, were never singled out by any report until the Government laid legislation in 2010.

I ask that the House passes the motion by acclamation and that we get on with the inquiries. I call on my right hon. and hon. Friends at the Treasury to do the right thing and ensure that full compensation is provided to the victims of this terrible scam.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the hon. Gentleman. Although I am, of course, impartial in all matters that happen here in the Chamber, I am an enthusiastic member of his all-party parliamentary group and most grateful to him for all the work he does.

Question put and agreed to.

Resolved,

That this House expresses grave concern regarding the Government’s continued inaction with respect to the injustice suffered by Equitable Life policyholders, the vast majority of whom have only received partial compensation compared to the confirmed losses directly attributed to regulatory failures despite the Government’s acceptance of the Parliamentary Ombudsman’s findings to compensate victims in full in relation to the maladministration of Equitable Life; notes the concern previously expressed by the Public Accounts Committee on the transparency and accuracy of the payments being made to victims; further notes the Government’s failure to fulfil the Committee’s request to publish an intelligible and transparent explanation to policyholders on how to verify the correctness of the compensation they have received; notes examples of grossly inaccurate payments, adjusted only when identified by policyholders, gathered by the Equitable Members Action Group (EMAG); notes the Government’s continued insistence that there have been no mistakes in the methodology for calculating payments to policyholders; and therefore calls on the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee to establish a joint inquiry into the accuracy of the payments made to victims of the Equitable Life scandal.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I will now suspend the House for a few minutes, to enable the necessary arrangements to be made for the next business.