Equitable Life

Ian Paisley Excerpts

Thursday 26th February 2015 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

I beg to move,

That this House congratulates the Government on providing a scheme to compensate victims of the Equitable Life scandal; welcomes the Government’s acceptance of the Parliamentary Ombudsman’s findings in full; notes that the Parliamentary Ombudsman recommended that policyholders should be put back in the position they would have been in had maladministration not occurred; further notes that most victims have only received partial compensation compared to the confirmed losses; and calls on the Government to make a commitment to provide full compensation during the lifetime of the next Parliament as the economy and public finances continue to recover.

In the run-up to the 2010 general election, the Conservative party discouraged candidates from signing any pledges, with one or two notable exceptions, the most notable being that of seeking justice for Equitable Life policyholders. Having done some research, I was very proud and pleased to sign that pledge. After I was successfully elected, I was immediately elevated to become co-chairman of the all-party group on Equitable Life policyholders. I am pleased to be able to report that we now have more than 200 members. That demonstrates what an important issue this is for people in this House and beyond.

It is important that we look at what is different about Equitable Life policyholders compared with those in other such schemes. With the advent of private pensions and the encouragement of individuals to save for their future retirement, Equitable Life developed an almost Ponzi-like scheme whereby its representatives went out and sold policies for which they promised bonuses and pensions that were beyond belief, and people were convinced to sign up for them. When that was reported to the regulator and the Treasury, they took no action whatsoever. This was all very well while money was coming into the pot, but eventually the amount coming in would be less than that going out, and therefore the scheme would collapse. The scheme therefore became too big to fail, because had it failed, the Government of the day, of whichever party, would have had to pick up the full cost of compensation to the policyholders.

The whole scandal was covered up during the scheme’s entire period of 20 years. A position was reached of a cosy relationship between the company, the regulator and the Government whereby they would not unveil the situation. The Equitable Members Action Group had to drag the Government through the courts. Eventually, in 2004, we had the publication of the Penrose report, which made recommendations about the position of Equitable Life. That was not good enough, because it did not do anything to compensate the people who had suffered. Then the parliamentary ombudsman made clear recommendations that the policyholders needed to be moved from the position where they had suffered a relative loss back to the position they would have been in had maladministration not occurred. That was very important. Equally, the ombudsman accepted that it would be appropriate to consider the potential impact on the public purse of any payment of compensation.

I am delighted that almost the first legislative step by the coalition Government was to put in place a scheme to compensate the individuals who had suffered a relative loss. We had argued in this Chamber for justice for those policyholders. There are various types of policyholders who have received different types of compensation. The first—

[Ian Paisley (North Antrim) (DUP)]

rose—

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

rose—

--- Later in debate ---

[Bob Blackman]

I am sure that my hon. Friend the Economic Secretary is listening, but she will clearly not announce the Budget measures today. After this debate, however, I will seek a clear commitment from the political parties about what they will do if elected to government on 7 May. Although it would be welcome if the Chancellor stood up at the Dispatch Box and agreed a full compensation package, the key issue is that if he cannot do so in this Budget, Members and people outside the House will want to know what the political parties would do to compensate those who have suffered.

[Ian Paisley]

I congratulate the hon. Gentleman on getting this matter on to the Floor of the House. He is in danger of being canonised by the many thousands of people in Northern Ireland who are watching this debate closely because of how unfairly they have been affected. I hope that those on the Treasury Bench are listening to the points that Members have raised.

There have been announcements this week about the bonuses to be paid to bankers in banks controlled by the public purse, and some bankers have taken the personal decision to refuse bonuses if they so wish. At least they have the choice. The people who have suffered under Equitable Life have not got a choice. I hope that Treasury Ministers are listening, and recognise that if they want the future support of Opposition Members, they should address this issue before the end of this term.

[Bob Blackman]

I will call the hon. Gentleman my honourable Friend because he has been stalwart in defending the rights of the people of Northern Ireland who have suffered in this scheme.

The key point is that, according to the published figures, the Treasury had a surplus of £8.8 billion in January, which was remarkable given that we were expecting £6.5 billion. Some proportion of the additional £2 billion surplus could be put towards compensation for policyholders who have suffered.