Ministers insist the Equitable Life issue is closed – but victims are right to disagree

More than two decades since the near-collapse of Equitable Life, customers who collectively lost more than £4bn continue their campaign for full compensation. They were awarded only £1.4bn by the government, despite it admitting a decade of serial maladministration. 

At the root of the long-running saga of the Equitable Life scandal lay serious and serial maladministration on the part of the government and financial regulators. This has been compounded by campaigners’ worries that miscalculations by officials managing the scheme mean some victims have been paid far less in compensation than they were owed. 

The partial compensation scheme for the victims of this scandal was set up by the coalition government in 2010. However, nearly a million victims were left with just 22.4% of the losses that they incurred, despite the government accepting the conclusion of the Parliamentary Ombudsman that their losses were the result of serious regulatory maladministration, and promising “to make fair and transparent payments to Equitable Life policyholders, through an independent payment scheme” to cover them.

Over a decade on, the balance – totalling approximately £2.6bn – remains unpaid. It is high time that this debt was settled, and a line drawn under this scandal for good. The victims, including those who are my constituents, cannot understand why the government has repeatedly refused to ensure that they get what they are owed and were promised. The vast majority had less than £20,000 in their pension pots. These are not wealthy people, by any means: they are teachers and nurses, engineers and small business owners – the very heart of our economy.

Many pensioners caught up in the Equitable Life scandal have struggled to make ends meet without the money they had saved for their retirement, and on which they thought they could rely. These victims are set to face further serious hardships. The Bank of England this month published economic forecasts that make for grim reading, projecting that real household incomes will fall on average by £1,000  by the end of the year. This is alongside the huge increase in energy costs.

The cost-of-living crisis will hit many thousands of people across the country if the government continues to fail to do what is needed to prevent households that are already struggling to make ends meet, forced into a choice between heating and eating. Some of those worst hit will be pensioners on fixed incomes, including victims of the Equitable Life scandal, left without most of the compensation that was promised them after a financial scandal that was not their fault. Banks were bailed out, as were savers in Icelandic banks. Even savers in high-risk, unregulated mini-bonds are being treated better by this government than those who responsibly saved for their retirement in what was, at the time, considered the safest and most revered of pension providers.

Tens of thousands of these victims have already sadly died without seeing the fairness that was promised. And a separate group of around 9,000 ‘With Profits Annuitants’, who took their annuities before September 1992, were unfairly excluded from compensation in 2010. These are the oldest and most vulnerable victims, yet they were only allocated an ex-gratia payment of £5,000 after sustained campaigning from MPs and the Equitable Members Action Group (EMAG). Providing them with compensation would cost just £100m. This could easily and quickly be settled from the underspend of funds already announced. Yet the government still refuses to act.

The Treasury has repeatedly said that it believes this matter settled, and that the compensation scheme is closed with no plans for it to be reopened. But neither I, nor my constituents, nor hundreds of thousands of victims of this scandal, consider the matter closed. Moreover, nor do my colleagues in parliament, where close to 300 MPs from across the Commons support the all-party group for justice for the victims involved. Now more than ever, the government needs to do the right thing and pay the victims of Equitable Life what they are owed – nothing less than full and fair compensation will do. Otherwise, much like the government’s plan for addressing the rising cost of energy bills, its actions will fall far short of what’s needed.