Equitable Life Policyholders: Compensation

Fabian Hamilton Excerpts

Thursday 22nd October 2026 Westminster Hall

[Fabian Hamilton (Leeds North East) (Lab)]

I beg to move, 

That this House has considered the matter of compensation for Equitable Life policyholders. 

It is an honour to serve under your chairmanship, Ms Furniss. I thank hon. and right hon. Members for attending this debate. Before I begin, I hope you will allow me to convey the apologies of a long-standing supporter of justice for Equitable Life policyholders, the right hon. Member for Goole and Pocklington (David Davis). He is sadly unable to join us this afternoon, but he has asked me to say that he has several constituents, as we all do, who remain without full redress following the collapse of Equitable Life. He asked me to mention those victims of the scandal in my speech today.

[Sir Desmond Swayne (New Forest West) (Con)]

On the issue of stalwart supporters, the hon. Member for Leeds North East (Fabian Hamilton) has been a magnificent supporter. I have come along to these debates for several years, and what I am looking for is at least some prospect of a result, because we have done this year in, year out. I have affected constituents, and I still support them, but what we need from the Minister is at least some sign that we are not flogging a dead horse.

[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.

[Dr Sam Rushworth (Bishop Auckland) (Lab)]

I thank my hon. Friend for the excellent job he is doing of speaking on behalf of our constituents. A constituent of mine, who wishes to remain anonymous, told me that he would today be receiving £20,000 a year had he invested his money elsewhere. He invested it where he did only because he believed the state was saying that it was safe to do so. I thank my hon. Friend for fighting on behalf of those people. I hope the Government will listen carefully to the recommendations.

[Fabian Hamilton]

I thank my hon. Friend, because what happened with Equitable Life meant the difference between a comfortable retirement and a struggling retirement, as his constituent, and constituents of every other Member in this room, will know full well.

The moneys from investing in Equitable Life policies were intended to provide security in old age—to pay household bills, to fund care and to reduce dependence on family members and the taxpayer—but the financial losses that people suffered in very many cases, as my hon. Friend points out, fundamentally changed their retirement. It has meant struggling with everyday expenses, it has prevented planned support for children and grandchildren, and it has meant facing later life with far less independence than anticipated. For some, it has led to the loss of the family home and to depression, stress and anxiety—there are plenty of examples of that. Of course, many feel intense guilt for having invested their family savings with the most respected, the longest-standing and, supposedly, the safest pension company at the time only to see it fall apart and dissolve.

The Government of the day argued that the £1.5 billion allocated for compensation was fair to both policyholders and taxpayers. Of course, public money must always be spent responsibly and the interests of taxpayers must always be considered. However, I think most people would agree that redress of just 22% of someone’s acknowledged losses is not fair—far from it—particularly when the state has accepted responsibility for losses caused by its own failures. I expect most people would think there is an undeniably compelling case to provide full redress.

[Martin Rhodes (Glasgow North) (Lab)]

A constituent of mine, who is now 76, changed jobs around the time of the collapse and was able to move his pension into a local authority pension scheme, although the transfer value took a 26% hit. Does my hon. Friend agree with my constituent that there must be greater transparency on this issue and that we must have meaningful reform of financial regulation, so that the experience of my constituent and of so many others is not repeated?

[Fabian Hamilton]

I certainly agree with my hon. Friend, and I will elaborate on that in a few moments.

[Peter Swallow (Bracknell) (Lab)]

As my hon. Friend the Member for Glasgow North (Martin Rhodes) pointed out, there are many issues connected with this scandal that have affected people’s trust in pensions. The Minister will know that I have also been a very vocal champion of those affected by the lack of indexation for pre-1997 pensions.

Does my hon. Friend the Member for Leeds North East (Fabian Hamilton) share my concern that the fundamental risk is that individuals will choose not to invest in pensions, having lost faith that, if something goes wrong, it will be put right? Ultimately, that will cost the taxpayer more, as people will not make the sound choice we want them to make of saving for their retirement.

[Fabian Hamilton]

My hon. Friend is absolutely right, and I certainly agree that at the heart of this matter is the issue of trust. As people throughout society lose trust in the institutions of government and the state, we will find increasing chaos and instability. Stability comes from trusting the institutions to deliver, and that trust is a two-way process. I thank him for his intervention.

The principle matters, not just to Equitable Life policyholders but, as we have just been saying, to wider public confidence in Government and the regulatory institutions upon which we all rely, as we have heard.

Aside from looking at full redress, I urge the Government to consider another issue. EMAG has calculated that, as of 31 May 2025, approximately £171 million of money already allocated for compensation had been held back by the Treasury rather than being paid to policyholders. This is not new money; it is money that had already been allocated. This situation deserves serious attention. It must surely be right that at least the value of all the money actually allocated for compensation as far back as 2010—16 years ago—should reach those affected.

It is important to understand the figures and what policyholders fear is the Treasury’s plan. Of the £1.5 billion allocated in 2010, £625 million was assigned to compensate with-profits annuitants; £100 million was retained as a contingency against the possibility that those annuitants would live longer than expected; and £775 million was allocated to the remaining eligible policyholders. Importantly, the £625 million allocated to annuitants was a discounted figure, reflecting the value at the time of future payments. The forecast cash cost of those annual payments was £836 million through to 2050, which is still a long way ahead of us. The forecast total cash spend of the compensation scheme as a whole was £1.7 billion—I hope everybody is following these figures.

According to the figures compiled by EMAG, actual payments to with-profits annuitants were around £599 million by 30 May 2025—just over a year ago—compared with forecast expenditure of approximately £646 million. That represents a difference of £47 million. And of the £775 million allocated to other policyholders, approximately £751 million had been paid out, leaving £24 million unspent. Together with the £100 million contingency, which EMAG argues is no longer required for its stated purpose, the total underspend as of May 2025 was said to be approximately £171 million. I will make sure the Minister gets those figures later; of course, they will all be in Hansard.

I recognise that the Minister may wish to examine or even dispute those figures and the assumptions behind them, but I think we can agree that it is in everybody’s interests that there is absolute clarity around this. I hope that the Government will provide that clarity. If funds have been allocated but are not needed to meet the liabilities for which they are intended, they should be used to compensate people who have still not received their full redress. Those people are already known and their losses have been calculated. There is therefore a strong case that additional payments could be administered without much cost and complexity. Releasing those funds would not address the issue of the full outstanding debt still owed, but it would be a positive step forward in this long-running saga.

There is a group of people whose position deserves particular attention and for whom an underspend could be used: around 10,000 with-profits annuitants were excluded from the compensation scheme because they bought their annuities before September 1992. When the Equitable Life (Payments) Bill came before Parliament in 2010 and 2011, I tabled an amendment to bring those 10,000 pre-1992 with-profits annuitants into the scheme, but it was sadly lost.

The argument for excluding those annuitants was that they could not have known about the true parlous state of Equitable Life at the time, but that does not take away the financial losses that they too suffered. They were affected by the same underlying regulatory maladministration and the near collapse of the society. They have seen their annuity payments drastically reduced just as other annuitants have. The ombudsman’s findings and recommendations did not distinguish between those who had taken out annuities before and after September 1992; that distinction was a construct of the Treasury, not the ombudsman or the society.

Those annuitants are, of course, among the oldest and most vulnerable victims of the scandal. Many will now be at a very advanced age, and many more have sadly died already. Every year that passes reduces the opportunity for them to receive the redress that they have long sought. Justice delayed is justice denied, but it has a particularly cruel consequence when the people waiting for it may not even live to see it delivered.

The Government should therefore examine how the underspend could be used to bring those annuitants into the scheme. EMAG has suggested that payments could be distributed in proportion to their current annual annuity payments, avoiding the need for individual actuarial calculations. The ex gratia payments made to them in 2013 following representations by MPs, including me, and EMAG could be offset against any additional payments, because they will be recorded. I urge the Minister to look closely at what can be done for the surviving pre-1992 annuitants—there are not that many of them.

An important core principle is at stake here. The Government, on behalf of the Crown in Parliament, have accepted the ombudsman’s findings and acknowledged £4.1 billion in losses attributable to maladministration. They have also calculated the specific losses suffered by individual policyholders. When the state accepts responsibility for a mistake and identifies the financial harm caused, it should be prepared to provide proper redress. The Government should not be exempt from the principles of accountability and fairness they expect others to observe.

Fuller compensation would also recognise the importance of the Parliamentary and Health Service Ombudsman to our unwritten constitutional system. Independent investigations and formal findings of maladministration must surely mean something. If those findings are accepted but the recommended redress is not delivered, public confidence in the system risks being further weakened, as has already been said.

I would also suggest that further compensation would not be money spent to no positive effect—quite the opposite, in fact. Additional compensation would help people to meet the costs of care and everyday living, support their families and contribute to local businesses and communities, and I have absolutely no doubt that a significant part would return to the Exchequer through taxation, so it is not all losses. More importantly, it would give people back some of the financial security that was taken from them through failures for which the Government have accepted responsibility. I will conclude by asking the Minister to address four specific questions. I apologise for the lengthy nature of my introductory remarks, but those points had to be made.

First, does the Minister believe that, in cases where the state has accepted responsibility for a failure leading to financial loss for individuals, and that loss has been calculated by it, the default position should be to provide full redress?

Secondly, can the Minister confirm that total cash expenditure on with-profit annuitants was forecast to be £836 million, that that figure was discounted to arrive at the £625 million allocation for those annuitants, and that actual payments to date are below forecast?

Thirdly, I will be grateful if the Government will confirm whether the £100 million contingency fund remains necessary to cover the risk that with-profits annuitants live longer than expected. If that contingency is no longer required for its stated purpose, will the Minister commit to considering its use for further compensation?

Finally, will the Minister agree to carefully examine the possibility of including the surviving pre-September 1992 annuitants who were excluded from the compensation scheme? The victims of this scandal have waited long enough. That is why there are so many colleagues in the room today. The victims did not create the regulatory failures that damaged their retirement savings. They followed the advice to save responsibly, trusted the system established by Parliament and were let down by the institutions charged with protecting them.

The Government have acknowledged the wrongdoing and losses and established a compensation scheme, but that scheme left the overwhelming majority of affected policyholders with only a small proportion of what they lost. Clearly, we cannot undo what has happened, but we can decide whether to leave this long-standing injustice unresolved or to take practical steps towards putting it properly right.

The Government should review the unspent compensation funds, reconsider the exclusion of the pre-1992 annuitants and set out a path towards full and fair redress. Those who lost their savings deserve more than just our sympathy. They deserve fairness and justice now through action by the Government, not more empty words.

[Gill Furniss (in the Chair)]

I remind Members that they should bob if they wish to be called.

--- Later in debate ---

[Fabian Hamilton]

I, too, thank all hon. and right hon. Members who have taken part in the debate: the hon. Member for Strangford (Jim Shannon), who is always direct and forthright; my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury); the hon. Members for St Ives (Andrew George) and for Christchurch (Sir Christopher Chope), who made excellent contributions; the hon. Member for Richmond Park (Sarah Olney), the Liberal Democrat spokesperson; the hon. Member for North Bedfordshire (Richard Fuller), the shadow Minister; and, of course, the Minister.

I first tabled a debate on this issue in June 2009—that was the first debate on this issue in this Chamber—and other Members have been debating the issue for even longer. I leave Members with the thought that compensation for Equitable Life policyholders is not just something that unfortunately not been fully fulfilled. My view, which was the view of many at the time, is that compensation is a moral obligation that has never been fulfilled. It is tragic that there is no question of reopening the scheme or using the statistics—the figures—about the moneys that are left; I think the Minister has just completely contradicted the view that there is no such money left.

Unlike two colleagues—the hon. Members for St Ives and for Wells and Mendip Hills (Tessa Munt)—I have not had a sabbatical. Nevertheless, I and many others who have campaigned on this issue will continue to campaign until the compensation is paid in full, however unlikely that may be. I again thank everybody for the part they have played in today’s debate, and also EMAG for all its work.

Question put and agreed to.

Resolved,

That this House has considered the matter of compensation for Equitable Life policyholders.