Equitable Life

Roger Williams Excerpts

Thursday 26th February 2015 Commons Chamber

[Mr Mike Weir (Angus) (SNP)]

It is a somewhat novel, perhaps unique, experience for me to be speaking in support of a motion that begins:

“this House congratulates the Government”.

However, credit where credit is due. Many of us raised this issue consistently with the previous Administration, who refused point blank to take any responsibility for the regulatory failures that led to the disastrous situation at Equitable Life, despite the fact that their own report by Lord Penrose pointed clearly to the regulatory failures in this case. This Government have grasped the nettle and introduced a scheme that has given some relief to many thousands of policyholders who have lost out.

Interestingly, in the last update on the scheme issued by the Treasury, it appears that some 160,000 policyholders have not come forward to submit a claim. A large number of people have still not taken advantage of the help that is offered at the moment, and we should continue to urge them to come forward. It took the report from the ombudsman to get the ball rolling on compensation, and I suppose the reason we are still debating it today was her conclusion that

“the diversion of scarce public resources is a relevant consideration which should be taken into account and weighed in the balance along with other relevant considerations”.

Despite what the hon. Member for Harrow East (Bob Blackman) said, there is a huge difference between the amount sought by the action group, which is about £5 billion, and the amount originally proposed by the Government, which was as little as £500 million. EMAG’s website quotes two vastly different figures, and the Government came down in the middle with a figure of £1.5 billion. I agree with much of what the hon. Gentleman said—we need to deal with the issue of compensation—but first we have to negotiate the sums involved.

The action group has consistently campaigned for full compensation. Its members thought it unfair that “affordability constraints”, as the Government put it, meant they did not get the full compensation to which they were entitled and that they only received 25% of the full amount. Its paper calls it a double injustice that Equitable pensioners should not only bear the cost of the Treasury’s inability to regulate Equitable Life in the 1990s, but be denied the full compensation owed to them because the Government’s inability to regulate the banking sector

“blew a hole in Government finances”.

There is some justice to that.

As the action group points out, policyholders have received compensation amounting to only 22.4% of their losses, and it argues that people’s pension savings, carefully accumulated over decades, should be safeguarded in exactly the same way as funds deposited in banks and building societies, but that is a dangerous argument to make, because funds protected in banks and building societies are subject to a maximum, so it is not complete protection.

[Roger Williams (Brecon and Radnorshire) (LD)]

I am sure that like all right hon. and hon. Members, the hon. Gentleman and I have constituents affected by this matter, and what they fear most is uncertainty. Mr and Mrs O’Meagher, who are 80 and live in my constituency, have to travel to London so that Mrs O’Meagher can give music lessons in order to top up their income, but they cannot continue to do that, and with their losses from Equitable Life, they see their life in terrible trouble.

[Mr Weir]

The hon. Gentleman makes a valid point, and I agree that this matter needs to be tackled—I shall say something about that shortly. In a follow- up report, the ombudsman was unable to conclude that the Government’s proposals complied with her recommendations for the establishment of a compensation scheme. Even the ombudsman says that more needs to be done.

Like most Members, I had many Equitable Life policyholders in my constituency, and I have had a considerable postbag on the issue from the outset. Many of the policyholders were elderly, and sadly some have died as the saga has ground on, but there remains a great sense of injustice among those still living. Equitable Life was touted as a long-established steady company —when I was a practising solicitor, it was seen as a gold-standard company. No one realised the problem lurking below the surface.