Equitable Life victims set for bigger payout

VICTIMS of the near-collapse of insurers Equitable Life look set for a more generous payout than expected, it has emerged.

Chancellor George Osborne is expected to use Wednesday's Comprehensive Spending Review to announce that compensation amounting to around 1.5 billion will be paid to policyholders who lost pensions and savings.

The sum is more than three times the maximum 400-500 million payment recommended by former Appeal Court judge Sir John Chadwick, who was appointed by the last government to determine compensation. More than one million policyholders lost out when Equitable Life came close to going bust in 2000 and they have fought over the past decade for recompense.

Many have died waiting for compensation and it is understood that their relatives will benefit from the payout. It has been estimated that up to 15 of the policyholders die each day.

Osborne is expected to announce up-front payments of around 1bn, while a further 500m will be made available in annual payments to with-profit annuity holders until their death.

It is expected that the first payouts are to be made next year, as it will take several months to set up schemes for paying the compensation.

Criticism is expected from some of those affected however, with the compensation package agreed being less than the relative loss of the policyholders.

Up to half the value of policyholders' pensions and retirement savings was wiped off after Equitable admitted it could not afford to pay out the bonuses it had promised.

Liz Kwantes, of the Equitable Life Members Support Group, said that policy-holders had not yet been informed of any compensation settlement.

And she said that, even if the 1.5bn figure was confirmed, it would fall well short of the 4bn-plus lost by Equitable Life customers. The sum proposed by Chadwick had been "derisory", Kwantes said. "We are still being asked for a cut of nearly 70 per cent, which is a lot more than anybody else is being asked to make.

"It was absolutely laughable, the derisory amount they offered originally. I don't know if they believed anybody would accept what they were suggesting."

Another campaigner, Paul Braithwaite, general secretary of the Equitable Members Action Group, said 1.5bn was not enough.

"We'll be working with backbenchers and with the new all-party committee of MPs to seek to honour both the ombudsman and the select committee," Braithwaite said.

A Treasury spokesman was reluctant to comment on the report, and would only say: "The government believes that the Equitable Life payments must deliver fairness to policy holders and taxpayers."