THE Government today looked to draw a line under the long running Equitable Life controversy with a promise of £1.5bn for policyholders who lost money when the firm came close to collapse more than a decade ago.
Chancellor George Osborne used his Spending Review statement to pledge four times the amount of money recommended by Sir John Chadwick although it is still short of the entire £4.3bn suffered by policyholders.
The figure represents the full cost of policyholders owning With Profits Annuitants policies who will be paid regular payments alongside a further £1bn in payments to all other policyholders.
Mark Hoban, Financial Secretary to the Treasury, said: “The Government has always been committed to making fair and transparent payments to Equitable Life policyholders, through an independently designed payment scheme, for their relative loss as a result of regulatory failure.
“We shall be paying in full the category of policyholders who suffered most from their losses.
“For other policyholders, we shall be providing a level of funding for the payment scheme that strikes a fair balance between the interests of policyholders and those of taxpayers in the current difficult financial circumstances.
“We need to continue the rapid progress that we have made in just five months so we can meet our aspiration to make the first payments by the middle of next year.”
In 2008, Parliamentary ombudsman Ann Abraham decided the Government was liable for losses suffered by Equitable Life policyholders because of a failure to regulate properly the company.
But Sir John Chadwick, who was asked by the last Government to advise on a fair payment system, put the sum at less than £350m.
Equitable Life was forced close to new business in 2000 as it struggled to pay the benefits it had promised on its policies.
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