Equitable Life

Geoffrey Clifton-Brown Excerpts

Thursday 26th February 2015 Commons Chamber

[Stephen Lloyd]

That is a very important point. The whole system—from the perspectives of finance, prudence and proper rule of contract law—fell apart under Equitable Life. It completely collapsed. When something like that happens in a country like the United Kingdom, the duty of the Government, irrespective of some of the broader issues, is to provide proper compensation, because otherwise the whole fabric becomes extremely vulnerable.

I find it bewildering that none of the senior managers of the old Equitable Life—and none of the people who were in charge of the marketing side or the investment side—went to jail. If I, as a Member of Parliament, find that bewildering, I can imagine the profound frustration that so many of our constituents must feel, given that they were doing the right thing. This was a company that was regulated, regulated within an inch of its life—that was the whole point of the sector—yet, through no fault of their own, it collapsed, and, a few years later, the parliamentary ombudsman said that there had been a systemic failure of regulation. All those senior managers and executives, whom we all knew, must have been aware of what was happening.

I greatly appreciated what was said earlier by the hon. Member for Stretford and Urmston (Kate Green). When she bought an Equitable Life pension which she kept for a few years, all the marketing suggested that the company was rock solid and the purchase almost a steal. She was told “You really must invest in this.” Those people must have known what was happening, and I fail to understand why they were not penalised.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

My hon. Friend is putting his case very articulately. When Mr Ralph Williams, along with a large group of my constituents, came to see me about this whole matter, one of the points that they made most strongly was that they were nearly all elderly. According to a parliamentary answer that I received on 10 February, only £990 million of the £1.5 billion total has been paid out. The Government are profiting from people who are dying at this very moment. Is it not only fair for everyone, including the annuitants, to be paid whatever the Government have agreed, in full, now?

[Stephen Lloyd]

I thank my hon. Friend for his powerful intervention, and I look forward to hearing what the Minister has to say in response to it. People are dying: there are no two ways about it, because of the age profile.

Another constituent of mine, David Stevens—a distinguished teacher for many years in Eastbourne, a former mayor and, as it happens, a Conservative councillor, who is also a very decent chap—lost out hugely in the Equitable Life debacle. He lost just under 80% of the worth of the pension in which he had invested for all those years.

This issue is about real people. That is why we are here, and why the all-party parliamentary group receives so much cross-party support. It is not just that we all know many constituents who are suffering and have experienced a profound loss despite having done the right thing, and despite being led to believe that the industry was heavily regulated. As I stressed at the beginning of my speech, I have believed—as others do—that this is a point of honour ever since I was elected in 2010, which is why I joined the all-party parliamentary group.

In a civilised country like the United Kingdom, people are often rightly encouraged to save and be prudent so that they are less of a burden on the general taxpayer. Hundreds of thousands of people did that on the basis of an absolute assurance that this was a properly regulated industry, and then lost out through no fault of their own. I have always believed that senior figures in the Treasury must have known that Equitable Life was wobbly, but many people have received 80% less than they should have received, and that is unacceptable.

I was delighted to speak today. I hope that both the Government and the Opposition will provide some succour.

--- Later in debate ---

[Robert Neill]

My hon. Friend makes an entirely fair point. This should all have been sorted out before the Government came on to the scene. The question of who was to blame and why ultimately requires almost a Crichel Down sort of approach—we must all accept responsibility for what happens under regulators who were not politicians. We must accept that it was done and must now resolve it. Had it been resolved sooner, there might have been more money around to deal with the issue. However, given where we are now and that the economy is improving, we can certainly do justice to people through a sensible series of staged payments, starting with those who are in the greatest need and who are most vulnerable. It is reasonable to ensure in the course of the Parliament that proper justice is done.

Let me give a sense of the impact on individuals. I have one constituent who makes the point that having invested sensibly his income has effectively been cut by some £20,000 a year. To a pensioner, that is an awful lot of money and they have had to downsize from their long-established family home. Another constituent has an acknowledged loss of £61,000 and is some £47,000 adrift with the payments out. That is not fair for somebody who has worked hard and is now in no position to supplement their income for the future.

Another very elderly gentleman had to wait some 18 months—because, frankly, of ineptitude and lost correspondence—to even receive acknowledgement of his entitlement. He should not have to come to his Member of Parliament to escalate these matters. That is something that any sensible and well-run compensation scheme should deal with as a matter of course. I am sure we all hope eventually to overcome the difficulties for our constituents, but they should not be happening in the first place.

[Geoffrey Clifton-Brown]

I am sorry to reiterate the point I made in an earlier intervention, but one member of the group of people who came to see me was elderly and, if he dies, his widow will get only 50% of the 22% he is entitled to, which is already pretty measly. Is it not incumbent on the Government to make payments now, in full, so that at least people can have that small amount of money to pass on to their dependants?

[Robert Neill]

On that basis, it is particularly important that we deal with the pre-1992 people, who are generally the oldest, but it is also important to have a proper, staged programme in place to deal with everyone.

When I was a lawyer, I accepted, as I think anyone would, that it was not possible to deliver for a client everything in their legitimate claim, because money might not be available or there might be delays. A settlement would be reached and a sensible discount accepted as a resolution, but I do not think that anybody would regard 22% as being a fair settlement of a claim. The Minister is an honourable woman and she must tell us today that she recognises that we are obliged, as a matter of honour, to give the people affected a sum much closer to that of their undisputed loss. As has been said, the quantum is not in dispute—it is a proven fact. We now need to say that, because of the improvement in the economy, we can do better than we were originally able to, for whatever reason. That is the honourable and legitimate thing to do, and it would also restore faith in an important element of our financial sector.

I agree with the hon. Member for Coventry North West and I hope there is enough that we can all agree on. The wording of the motion itself gives the Government the flexibility, provided there is good will—I am sure there is—to achieve its aims in a fair way for the people who have lost out through no fault of their own.