Equitable Life Policyholders: Compensation

Sam Rushworth Excerpts

Thursday 22nd October 2026 Westminster Hall

[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.