Government to create Equitable Life compensation commission

The coalition government will establish an independent commission in the first session of parliament that will design a scheme to pay compensation to Equitable Life policyholders.

Writing in The Daily Telegraph, financial secretary to the Treasury Mark Hoban (pictured) said the government would stand by its coalition agreement pledge to compensate those who lost money when the life company was closed to new business in 2000.

Hoban said the government would follow the Financial Ombudsman Service’s recommendation to compensate the one million savers who lost money.

‘The government is committed to implementing the Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policyholders, through an independent payments scheme, for their relative loss as a consequence of regulatory failure,’ he said.

‘We will be introducing a Bill in the first session of this parliament that will enable payments to be made and will be establishing an independent commission that will determine the design of the payments scheme.

‘This is a sign of our commitment to deliver on the pledge we made in our coalition agreement.’

Savers are thought to have lost a total of £4.67 billion but there have been fears the government will pay out just £1 billion.

Earlier this month, Stuart Pole of the Equitable Life Members Action Group, said: ‘We are deeply disturbed by the gulf between the expectations raised by the government’s promise and what appears to be actually going on at the Treasury.

‘If the government offers victims 20p in the pound there will be outrage.’