Page last updated at 12:40 GMT, Wednesday, 21 October 2009 13:40 UK

Equitable payment plan revised

Equitable Life sign
The Equitable warned the compensation saga could still drag on

The government has agreed to widen the scope of the forthcoming Equitable Life compensation scheme.

It was defeated last week in a judicial review brought by campaigners for those who lost money in the pension company's near-collapse.

They had challenged the government's refusal to accept that some savers with the Equitable had suffered maladministration and injustice.

But the compensation scheme will still be limited to those who suffered most.

"We welcome the court's rejection of the challenge to our decision to establish a scheme to make ex-gratia payments to policy holders who have suffered injustice," said the chief secretary to the Treasury, Liam Byrne.

Expanded scheme

In a statement to the House of Commons, Mr Byrne accepted the findings of the two High Court judges last week.

Our policyholders have been waiting far too long to have this injustice righted - they are entitled to closure
Chris Wiscarson, Equitable Life chief executive

He said as a result, the compensation scheme which is being devised by a former High Court judge, Sir John Chadwick, would now cover more people than first envisaged.

"This will expand the scope of his work, primarily by bringing forward the start date for the findings he is considering from July 1995 to July 1991... but should not unduly delay it."

However, Sir John is still being asked to suggest compensation only where the government accepts that losses were due to the mistakes of the various government departments and regulators that were responsible for overseeing the Equitable, rather than those of the Equitable's own management.

And he is still being asked to advise on making payments only to those who suffered "disproportionately".

"These payments will be to people who have suffered disproportionate impact, arising from maladministration and resulting in injustice accepted by the government," Mr Byrne emphasised.

Dragging on

The government's regulatory failings were pinpointed in a report by the Parliamentary Ombudsman, Ann Abraham, last year.

She recommended that all the Equitable savers who lost money as a result of saving with the pension company after 1991 should be compensated in full by the government for their subsequent losses.

The Equitable Life gave a partial welcome to the minister's announcement.

"Equitable Life welcomes the government's decision to expand the scope of the work of Sir John Chadwick in line with the recent court ruling," it said.

"However, Equitable Life appeals to MPs to continue to demand progress towards justice for its policyholders in tomorrow's parliamentary debate.

"[We fear] that many policyholders may not receive the compensation that they are due if the government continues to rely on 'disproportionate impact' rather than the Parliamentary Ombudsman's more straightforward recommendation of 'relative loss'," the Equitable added.

Sir John is accepting representations until 27 October and has been asked to report as quickly as possible afterwards.

"Without a clear deadline for delivery, the process is set to drag on indefinitely," warned Chris Wiscarson, chief executive of Equitable Life.

"Our policyholders have been waiting far too long to have this injustice righted - they are entitled to closure," he added.

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