Tories earmark £1bn for anyone who lost in Equitable Life crisis

Published on Saturday 3 April 2010 20:18

POLICYHOLDERS whose savings were badly dented when Equitable Life came close to collapse will receive compensation should the Conservatives win the general election.

Around a million customers and the families of some 30,000 people who have died since the crisis ten years ago are to get fast-track payouts which could total up to 1 billion.

A decision to compensate Equitable customers during the financial crisis is controversial, but sources within the Tory party say cash for compensation has already been earmarked by the Treasury.

The move follows frustration at years of delay after an official inquiry found the government had given them a "wholly misleading picture" of how secure their money would be.

The next step will involve independent experts drawing up compensation based on what investments and pensions would have been worth today.

Shadow ministers say the government is obliged to pay compensation after a number of damning rulings by the Parliamentary Ombudsman.

Labour has said only the "disproportionately affected" should be recompensed.

The Tories say they reject the means-testing element, a move which could result in compensation going to a number of well-off middle-class professionals.

They have also contrasted the Equitable Life delay with the swift recompense offered to Britons affected by the recent Icelandic banking collapse.

Mark Hoban, Tory Treasury spokesman, said: "If more than 30,000 people had died waiting for justice in any other situation there would be rioting.

"We are making a firm pledge to compensate policyholders and dependants, with no means testing."

Ombudsman Ann Abraham, who headed a major inquiry, identified ten instances of maladministration between 1998 and 2001 at the Department of Trade and Industry, the Government Actuary Department and the Financial Services Authority.

The Tories said the design of the scheme would be determined independently of government with regard taken to the impact on the public purse.

Meanwhile it has emerged that Britain's high-street banks, mostly south of the Border, have been quietly closing branches.

Internal industry data shows there are 434 fewer branches than three years ago as Barclays, HSBC and Lloyds Banking Group have all abandoned dozens of premises.

The closures have raised fears about the impact this will have on the elderly and those in rural communities.