More than 200,000 victims of the collapse of Equitable Life may miss out on compensation because of failings in a UK government scheme, a scathing report by a Westminster spending watchdog warned today.
The House of Commons public accounts committee accused the Treasury of adopting an “arbitrary” target of March 2014 to close the compensation scheme, and urged it to take urgent action to track down as many former policyholders of the failed insurer as possible before the deadline passes.
After a decade-long battle by Equitable savers, the Treasury announced shortly after the coalition government took office in 2010 that it would compensate up to 1.5 million policyholders. Chancellor George Osborne capped total payments at £1.5 billion in his spending review later that year.
But today’s report found that the government “failed to learn the lessons” from previous schemes, such as those for former miners.
The Treasury focused on an arbitrary deadline of June 2011 for making the first payments, at the expense of planning properly for how the scheme would be administered, the report noted. A “lack of good planning” led to “unacceptable delays” in payments, with only £168 million paid out by March 2012, rather than the expected £500m.
A Treasury source said: “While Labour did absolutely nothing about the Equitable Life scandal for a decade, this government has allocated up to £1.5bn to help people who suffered a great injustice, with thousands of policy holders receiving around £700m in payments since 2011.”