Ministers revealed in last month's comprehensive spending review that some 1.5 million policyholders who lost out when the insurer almost collapsed a decade ago would share 1.5 billion in tax-free compensation. The figure was more than three times the payout recommended in an independent review by Sir John Chadwick but short of the 4.5bn loss that campaigners said victims had suffered.
However Nick Clegg, the Deputy Prime Minister, yesterday claimed that while the government would liked to have paid out more, policyholders had "no prospect" of compensation under Labour. He was responding to a question from Gregory Campbell MP, of the DUP, who said there was "anger and frustration" among thousands of Equitable Life policyholders and urged ministers to reach a "more satisfactory conclusion".
Clegg said the compensation package was "far in excess" of the amount recommended by Chadwick. "We would always like to provide more compensation, but the compensation we are providing is much much more than many people expected," he added.
Mike Weir, the SNP Westminster spokesperson on regulatory reform, also attacked the government's compensation plans yesterday, accusing it of setting an "arbitrary cap" on compensation.
"Despite accepting the (parliamentary] ombudsman's report, which found maladministration by regulators and Whitehall officials, the UK government is still unprepared to take responsibility for these failures and offer compensation those who have lost out through no fault of their own," he said.
The campaign for redress began when the insurer was forced to close to new business in 2000 after losing an English High Court decision over the rights of policyholders.