Equitable Life (Payments) Bill

Stephen Hammond Excerpts

Wednesday 10th November 2010 Commons Chamber

We know now that those rates were deceptive, but during the 1980s those rates were paid and those bonuses added to the asset pool being put together. Therefore, it cannot be gainsaid that, certainly by 1990, most people with an asset share in an Equitable Life policy probably had an amount that was well beyond what was appropriate for the investment that they had made. In other words, they were over-supplied with bonuses during that period.

[Stephen Hammond (Wimbledon) (Con)]

I have taken part in a number of these debates during my short period as a Member, and, unlike some hon. Members, I am not reluctant to praise the Minister. However, in my constituency surgery last Friday I saw an 80-year-old gentleman who accepts the points that my hon. Friend now makes, but makes the point himself that the pre-1992 group are still trapped and unable to take any action. Had they been able to take some action to mitigate or ameliorate their circumstances, they would have done so. My hon. Friend the Minister has done a great job in moving the issue forward so quickly, but I hope that he will at least listen to the concerns of the pre-1992 annuitants.

[Jonathan Evans]

I am grateful to my hon. Friend for that contribution. He approaches the issue with significant expertise, so he will know that, if we are to achieve justice, it is not just a question of treating all those pre-1992 policyholders in the same way as everybody after 1992. One would go back and assess the pre-1992 annuitants’ asset share to see whether they were paid 105%, 110%, 120% or 140% of asset share; and one would correct that, so that the pre-1992 and post-1992 annuitants were dealt with in a balanced way. The danger with the proposed approach is that there will not be that balance. It is already clear, from the question asked by my hon. Friend the Member for Bedford (Richard Fuller), that we do not have a basis for the figure of £200 million; it is a wet finger in the air in order to assess the situation.

The second factor that causes me significant concern is the lack of available actuarial information. I share all the concerns about the Chadwick process, and, although Sir John might have made an observation about the pre-1992 annuitants, he did not compute their liabilities. The danger, therefore, of being seduced by the strong arguments of the hon. Member for Leeds North East, is that we would enter into an open-ended commitment and have great difficulty realising its objective. During the debate, however, he has made a good case on behalf of those annuitants who go back to 1991. We should remember the judgment made by the ombudsman and her terms of reference. Most of the inquiries started looking at the period from 1999 onwards, but most of the condemnation about regulatory failure goes back to events prior to 1991. It is important that the Committee should take that factor into account when invited to say whether compensation should be granted going back very many years before that.