Page last updated at 12:24 GMT, Thursday, 22 July 2010 13:24 UK

Ministers aim for Equitable Life compensation in 2011

Policyholders who lost money when Equitable Life collapsed should begin to receive compensation next year, MPs have heard.

In a Commons statement on 22 July 2010, Treasury Financial Secretary Mark Hoban said the government was committed to make "fair and transparent payments" to those who lost out.

But he said the overall size of the compensation fund would be considered "in the light of what is affordable" as part of October's spending review.

Equitable Life was forced to close to new business in 2000 when it lost a legal battle in the House of Lords over the rights of policyholders.

It is now two years since the Parliamentary Ombudsman called for policyholders to be paid redress after finding 10 instances of maladministration by regulators and Whitehall officials in relation to Equitable in the period leading up to December 2001.

Mr Hoban said: "I would like to end the plight of policyholders as soon as possible and I aim to begin making payments in the middle of next year."

He added: "This is, however a very complex task. We have made much progress since the government was formed but there is a great deal left to do.

"We need a simple, transparent and fair scheme that meets the needs of 1.5 million policyholders who have between them two million policies and have made 13 million premium payments.

"It is in the interest of each of these policyholders to complete this task quickly but also carefully and thoughtfully."

Shadow Treasury chief secretary Liam Byrne said Labour would support the legislation so it could progress "as rapidly as possible".

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