Equitable Life (Payments) Bill

Peter Aldous Excerpts

Tuesday 14th September 2010 Commons Chamber

[Peter Aldous (Waveney) (Con)]

Like most Members—I should probably say all Members—I have received many letters from constituents who have been let down by the regulatory system and who are worried that they will not receive fair compensation for the losses that they have incurred. Several of them are struggling to keep their heads above water.

I place a lot of weight on the ombudsman’s recommendations and findings. In her letter to MPs of 26 July, she sets out five requirements for a fair settlement: independence, transparency, simplicity, speed, and potential impact on the public purse. Those need to be the guiding lights to a fair and just outcome. My hon. Friend the Financial Secretary to the Treasury is to be commended for the speed at which he has moved to resolve the matter. He has established an independent commission to come up with proposals for the design of the compensation scheme and he has committed to starting to make payments in the first half of 2011. That said, there are still issues to be addressed and it is those issues that worry and concern my constituents and the group that represents them.

I appreciate that today we are not deciding and voting on the level of compensation and that that will be determined at the comprehensive spending review in October. However, what is said today is a barometer of the mood of this House and must be taken into account when the level of compensation is decided. Let me refer back to the Minister’s statement in July. For me, there is an inexplicable quantum leap from the relative loss of £4.8 billion to Sir John Chadwick’s total payment of between £475 million and £600 million. Those latter figures are way too low. I must dispute Sir John’s opinion that the majority of policyholders would have made the same investment decision irrespective of maladministration. That flies in the face of the evidence and of what my constituents are telling me.

On the way forward and complying with the ombudsman’s recommendations I would make two suggestions. First, to achieve a fair settlement, the Government must review Sir John’s suggested settlement figure and it must be crystal clear, simple and transparent how the eventual figure was reached. Yes, there is a need to consider the impact on the public purse, but any allowance must be fully explained and easily understood. Secondly, I request that the independent commission overseeing the design and delivery of the compensation scheme consider a framework that ensures prompt payment as soon as possible in the new year to the eldest policyholders and those in the most need. Thereafter, there should be further waves of payment depending on policyholders’ proximity to retirement and relative exposure. EMAG has proposed how such a scheme could work and I am sure that Equitable Life would work with the commission to ensure that such a scheme would be fair to all and would recognise individual hardship.

My hon. Friend the Financial Secretary has made a lot of progress in the past four months. He has hit the ground running in his new role, but the Government need to go that extra mile to achieve the fair and just outcome that the ombudsman recommended and that so many of us—myself included—signed up to.