Equitable Life Policyholders: Compensation

Christopher Chope Excerpts

Thursday 22nd October 2026 Westminster Hall

[Fabian Hamilton]

I thank the right hon. Gentleman—and, dare I say, my right hon. Friend. We have known each other for many, many years, and he has also been a stalwart supporter. If he and the Minister have enough patience and are able to listen to what I have to say, they will hear me offer certain ideas that I hope will be pursued, because it is about time this issue was wrapped up for good.

I am grateful to all those who have continued to campaign for justice for the victims of Equitable Life and the scandal that followed, including the Equitable Members Action Group, whose work has helped to keep this issue before parliamentarians, as the right hon. Member just pointed out.

Of course, this debate is about more than just money; it is about fairness, accountability and the relationship between the state and the people it is supposed to represent and protect. It is about whether people who worked hard, saved responsibly for their retirement and trusted the regulatory safeguards established by Parliament should be left to bear the consequences of acknowledged Government and regulatory failure.

My central argument is therefore straightforward: the state has accepted responsibility for serious regulatory maladministration that caused policyholders substantial financial losses, yet the majority of those policyholders received only a fraction of the compensation for their losses. That injustice remains unresolved, and I believe the Government should now take practical steps to put it right.

[Sir Christopher Chope (Christchurch) (Con)]

I am grateful to the hon. Gentleman for bringing forward this debate. Does he agree that one of the fundamental issues is who regulates the regulators? When the regulators failed in this case, ultimately the ombudsman tried to regulate the regulators, but the regulators were too stubborn to accept the ombudsman’s recommendations. So who is going to regulate the regulators?

[Fabian Hamilton]

I think that is above my pay grade. The fact is that we all need to be vigilant to ensure that the regulators are properly regulated. I imagine that it is up to us as parliamentarians to make sure that those who are charged with regulating—or with regulating the regulators—do their job properly and prevent this kind of injustice from ever happening again. But the fact is that it has happened, and many people have suffered.

Equitable Life is one of the biggest scandals in the history of UK financial services, with more than 1 million people losing a significant proportion of their hard-earned retirement savings. Those people had done what successive Governments encouraged them to do: they worked hard, saved and made provision for their later years, rather than relying entirely upon the state. They trusted that the regulatory system established by Parliament—I hope this addresses the hon. Gentleman’s point—would provide appropriate oversight and protect the public from serious failures in the financial services sector. However, they were let down by Government Departments and regulators that failed to do their job to an acceptable standard.

Following a four-year inquiry, the parliamentary ombudsman found that policyholders’ losses were directly attributable to a decade of serious and serial regulatory maladministration. The ombudsman made 10 determinations of maladministration and five of injustice, and concluded that the serial maladministration had resulted in the true financial position of Equitable Life being concealed and misrepresented. The findings were exceptionally serious. The ombudsman stated that

“the prudential regulation of the Society…failed comprehensively”

and catastrophically, but that, crucially, it was not a failure of the regulatory system itself. It was

“a failure properly to implement in the particular case of the Society the system of regulation that Parliament had enacted.”

The ombudsman also made it clear that no other party could be said to be at fault, because the regulators, acting with the advice and assistance of the Government Actuary’s Department, had “acted with maladministration”. Those were not merely the complaints of disappointed investors; they were the formal findings by our independent parliamentary watchdog after a forensic and lengthy investigation. The ombudsman recommended that

“the Government should establish and fund a compensation scheme…to put those people who have suffered a relative loss back into the position that they would have been in had maladministration not occurred.”

In 2010, the Government accepted the ombudsman’s findings in full. They acknowledged losses of £4.1 billion, yet only £1.5 billion was actually allocated to compensation. That is the fundamental unfairness that the victims of this scandal want to put right.

Of the policyholders affected—forgive me for all the statistics, but they are relevant—37,000 with-profits annuitants are receiving full compensation through annual payments for life: so far, so good. However, approximately 895,000 other policyholders received a one-off payment amounting to just 22.4% of their acknowledged losses, barely one fifth of the compensation needed to address the losses that the Government accepted had resulted from maladministration. According to figures supplied by EMAG, those policyholders are still owed £2.6 billion before any consideration of interest. I ask the Minister to reflect on what that means in human terms. For many people, retirement savings represent decades of sacrifice. They are the savings that are put aside instead of taking holidays, improving homes or spending more freely on themselves and their children during their working life.

--- Later in debate ---

[Sir Christopher Chope (Christchurch) (Con)]

Let us put the issue in context. The headline today is that we now have £3 trillion of national debt, which represents an increase of £1 trillion over the last six years. That debt has accumulated largely because of Treasury neglect and bad policy. The Treasury continues to talk about having low interest rates and an inflation target of 2%, but as we now know, it consistently allows inflation to be above 2%, with the most recent figure being 3.5%. That erodes the value of people’s pensions. Under successive Governments, the Treasury has behaved appallingly on the Equitable Life pensioners. I congratulate the hon. Member for Leeds North East (Fabian Hamilton) on securing this debate and introducing it so well. He asked four pertinent questions—nice, easy, simple questions—and I hope that the Minister will answer each of them affirmatively in his response.

My interest in this subject goes back many years, not only because my constituents were badly affected by the collapse of Equitable Life, but because I was a shadow Treasury Minister when the Treasury set up Lord Penrose’s inquiry into the scandal. That inquiry is another example of the Treasury delaying the process to try to kick the can down the road. Although the inquiry was initiated in 2001 and Lord Penrose reported to the relevant Treasury Minister at the time, Ruth Kelly, in December 2003, it was three or four months before the Treasury deigned to publish his report, and another four years after that before the publication of the ombudsman’s report. In setting up the inquiry, the Treasury deliberately prevented Penrose from finding issues of maladministration. The Treasury has been complicit in denying the victims of regulatory failure the compensation to which they should have been, and still are, entitled.

Successive Governments are responsible for allowing this appalling saga to continue. Today, the Minister has the opportunity to change that and restore public confidence in the Government, the blob and the way in which such things are administered. Earlier I asked the question: who regulates the regulators? If a regulator is in place and that regulator falls down on his responsibilities, people expect that there will be some redress, but that does not seem to be accepted at the highest levels in Government, so I hope that that can change.

This issue is not going to go away. That is a tribute to the persistence of parliamentary colleagues, the EMAG campaigners and our constituents, who are behind all this and who are saying, “What has happened to this extra money? Why can’t we have it paid out to us?” I said at the beginning that in the context of where we are with the national debt, this is very small beer, but it is not the money so much as the principle that is important, and I think that the principle is overridingly in favour of paying out what is due to these people, who were victims of Government maladministration.