Equitable Life

Part of Business of the House – in the House of Commons at 1:21 pm on 15 January 2009.

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Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury) 1:21, 15 January 2009

I congratulate the ombudsman on the way in which she investigated this matter—she has done her job in an exemplary fashion. I would also like to thank the policyholders and their action groups who have made sure that this issue was always on our agenda—their persistence has paid off. After years of trying to block compensation, the Government have finally admitted today that the regulators failed Equitable Life's policyholders and that they deserve justice.

It has been a long, hard fight by campaigners, made longer and harder by the intransigence of a Government who have consistently sought to evade taking responsibility for what happened at Equitable Life. In 2004, the Treasury ignored the Penrose report's findings that the regulators had failed. The Treasury then tried to argue that the ombudsman could not investigate a decade of regulatory failure. Having lost that argument, the Treasury bombarded the ombudsman with new information and a 500-page submission on her draft report, so that a report that was due at the end of 2005 was finally published in July 2008, and for the past six months the Government have been sitting on it. Even this statement has been delayed—the Government promised it in the autumn, the Prime Minister promised it before Christmas and we have been waiting until January to get a copy of it.

Why has the Treasury has sought to block, frustrate and delay this report, and block justice for policyholders? It has done so to hide the Prime Minister's embarrassment. The most damning findings of maladministration related to the period since 1997—a period when the Treasury and the Prime Minister had responsibility for regulation. While the Treasury dithered and delayed to spare the Prime Minister, 30,000 policyholders died—they will never see the justice that they deserved—and policyholders living on reduced pensions and annuities paid the price for the Government's failure to act sooner.

The Chief Secretary to the Treasury quoted Lord Penrose's comment that

"the society was author of its own misfortunes."

However, he also concluded that

"the practices of the Society's management could not have been sustained over a material part of the 1990s had there been in place an appropriate regulatory structure."

The ombudsman's hard-hitting report backed that conclusion. The regulators failed to use their powers to stop the destruction of Equitable Life. Report after report shows that policyholders were let down by regulators. Why have we had to wait until now for the Government to concede that compensation should be paid?

In 1989, the then shadow Trade and Industry Secretary—now the Prime Minister—asked

"why it took an internal inquiry, a departmental inquiry and now the ombudsman's investigation...before justice began to be done?"—[ Hansard, 19 December 1989; Vol. 164, c. 204.]

Twenty years later, we ask the same the question today. Why did the Government wait so long to recognise the regulatory failings that led to Equitable Life's policyholders losing money?

We have always believed that policyholders should be compensated if maladministration was found, so we welcome the Government's announcement. Can the Chief Secretary to the Treasury answer some simple questions? She is aware that policyholders have waited some time for justice and she said that she had no timetable to indicate when they would receive it. When will Sir John give an interim report on his work? She also announced what appears to be a hardship fund. Why has she rejected the Public Administration Committee's conclusion that

"the payment of compensation is not a matter of charity but...of justice"?

Who does she expect will benefit from this fund? Will it depend on how much people have invested or how much they have lost, or on their broader financial position? Is this about means-testing compensation rather than about compensating people for injustice? Can the Treasury explain whether it has imposed a cap on how much compensation can be paid to policyholders, either individually or as a group?

The Treasury could have decided to compensate Equitable's policyholders when Lord Penrose reported five years ago, but instead it has dragged this out to save the face of the Prime Minister—and it is policyholders who have paid the price. Now the Government have conceded the case for compensation they can no longer drag their feet. Justice cannot be denied any longer.