The victims of the Equitable Life collapse are to receive £1.5 billion in compensation ten years after the insurer came close to insolvency – three times more than the amount recommended by a government report.
Up to one million policyholders were affected by the collapse with many experiencing a significant cut in their pension and annuity pay outs. Figures revealed that the amount lost totalled almost £5 billion.
However, a report led by Sir John Chadwick earlier this year suggested that the victims should receive between £400 million to £500 million in compensation leading to uproar amongst campaigners and social groups.
Nevertheless the new compensation figure has still left many dissatisfied with the result.
Liz Kwantes, head of the Equitable Life Members Support Group, said the sum, which will be announced by Chancellor George Osborne next week, was still not enough. She added: “Throughout the 1990s, people didn’t actually know what the problems were with Equitable. The figures given to the government weren’t the figures we saw. They were allowed to continue advertising and they weren’t properly regulated”.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “Undoubtedly many Equitable investors will still feel let down by this settlement, having been led by the Parliamentary Ombudsman to expect a compensation package of somewhere nearer to £5bn”.
He continued: “If a settlement had been made before 2008 the it might perhaps have delivered a more generous outcome but the world has changed, across the economy spending is being cut, taxes are rising and jobs are being lost”.