It’s hard to know how the Equitable performed in relation to its peers since it does not publish public performance figures, but IFA Alan Steel polled a group of Equitable clients and came up with a figure of 6% for 15-year policies maturing in July 2003. "The average annual return over the period was 8.3%, with the top performers making 13.5%. Only two did worse than the Equitable," said Steel. "What the Equitable claimed in terms of performance bore no relation to what they actually did. They were dire investment managers. They claimed to produce the best results year after year. But what they were really doing was investing badly then emptying the kitty.
"Add to this the fact that many policyholders never saw these wonderful results - their money was all taken away by penalties and they received no bonuses."
The other implication from the Treasury statement is that Equitable policyholders did not suffer too much, and whatever they lost they could afford. It is hoping that the popular profile of Equitable policyholders as wealthy toffs will help ease the pressure for compensation.
I spoke to one Equitable policyholder, a lawyer who had to return to work when the Equitable cancelled his guaranteed annuity. He said: "There is a lack of sympathy for people like me, but the fact that I am not destitute does not mean that financial institutions should be able to carry on in this way."
He talks about his careful planning and his low-risk approach to investing and, in doing so, makes a solid case for compensation. But ironically, the more articulate that policyholders are in putting their case for compensation, the less likely they are to be seen as needing that compensation.
We will have to hope that Andrew Tyrie, the shadow Treasury spokesman, will do his job, but he is playing the widows and orphans card, which makes the compensation case unnecessarily emotive: "We don’t know what the [Penrose] report will reveal, but if it does point to regulatory failure then victims must be compensated. It is very difficult indeed to justify putting vulnerable, elderly people through the three-and-a-half-year wait," Tyrie has said.
But this is a matter of principle, not a humanitarian aid project. Is the government really suggesting that thresholds should be introduced to ensure that only investors who are lower-income earners, or who are not able to return to work, should receive compensation? This is just another attempt to avoid responsibility - all investors should enjoy equal protection, regardless of standing.
There’s only one reason why Equitable policyholders have not been paid the compensation they deserve - the cost.
There are plenty of estimates of the total bill, with 6bn being the current favourite. Were it a smaller amount, it is likely that an admission of guilt and an offer to settle would already have been forthcoming; as it is, the FSA, the DTI and the Treasury all feel obliged to claim that they were not negligent in any way. This has been a bold gamble, not least because the amount owed is still growing.
When the problem first arose, the regulators could have considered the cowardly but perfectly acceptable way out last used by the Conservative government in the Barlow Clowes affair: "Recognising that the case has caused great hardship, they are prepared to make, without admission of fault or liability, payment to investors who have suffered losses."
Instead, today’s regulators have gambled the pot. Let’s hope Penrose calls their bluff.