Equitable Life policyholders due compensation and apology
A report by Parliamentary Ombudsman, Ann Abraham, into the near collapse of Equitable Life has been published today.
In 2001, millions of investors in the UK’s oldest mutual insurance company lost up to 50% of the value of their pension funds.
The report, which accuses regulators of comprehensive failure and the Government of maladministration, recommends that a scheme be established to consider individual claims for compensation.
Equitable Life was founded in 1762 and before its demise had grown into a £26 billion business, with 1.5 million policyholders.
During the 1950s it began selling policies that guaranteed a minimum annuity rate to investors and this strategy eventually led the company to a point where it could no longer honour its promises and was forced to close to new business.
The Department of Trade and Industry, Government Actuary’s Department, and Financial Services Authority (FSA) all receive criticism in Ms Abraham’s report.
She found that the regulatory bodies involved with Equitable Life had functioned in a passive, reactive and complacent manner and that the FSA had supplied policyholders with information that was inaccurate and misleading.
The Ombudsman says she expects a compensation scheme to be set up within two years of the publication of her report and recommends that a public apology is made to policyholders who have waited years for the chance to recover their losses, which are estimated at a collective £4 billion.
The Treasury says it needs time to give Ms Abraham’s report careful consideration and will provide a full response to Parliament in the autumn.
Category: Companies News, Financial Services Authority News
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