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Equitable Life compensation expected to total £1.5bn | Equitable Life compensation expected to total £1.5bn |
(about 1 hour later) | |
The government is to pay customers of Equitable Life compensation totalling £1.5bn, the BBC understands. | The government is to pay customers of Equitable Life compensation totalling £1.5bn, the BBC understands. |
That would be three times more than that recommended in an official report. | That would be three times more than that recommended in an official report. |
An official announcement to the 1.5 million savers who lost out is expected to be made as part of the government's Spending Review on Wednesday. | An official announcement to the 1.5 million savers who lost out is expected to be made as part of the government's Spending Review on Wednesday. |
Equitable Life said that it would not comment on rumour, while the members' help group said many will be happy a decision has at last been reached. | Equitable Life said that it would not comment on rumour, while the members' help group said many will be happy a decision has at last been reached. |
The group's Liz Kwantes said: "We've been waiting for this for 10 years. On the other hand, some people may think this is derisory compared to what we should be getting." | The group's Liz Kwantes said: "We've been waiting for this for 10 years. On the other hand, some people may think this is derisory compared to what we should be getting." |
Another campaigner, Paul Braithwaite, general secretary of the Equitable Members Action Group, told the Money Box programme on Radio 4 that £1.5bn was not enough. | |
"We'll be working with backbenchers,and with the new all-party committee of MPs to seek to honour both the ombudsman and the select committee," Mr Braithwaite said. "So the fight goes on." | |
A Treasury spokesman said: "The government believes that the Equitable Life payments must deliver fairness to policy holders and taxpayers." | A Treasury spokesman said: "The government believes that the Equitable Life payments must deliver fairness to policy holders and taxpayers." |
Some estimates put the amount lost by the policy holders at £4.5bn. | Some estimates put the amount lost by the policy holders at £4.5bn. |
The compensation is still less than many policy holders were hoping for. One, Debbie Wade, says she lost tens of thousands of pounds. | The compensation is still less than many policy holders were hoping for. One, Debbie Wade, says she lost tens of thousands of pounds. |
"To be honest, I'm relieved that a sort of half reasonable conclusion has been reached," she told the BBC. | "To be honest, I'm relieved that a sort of half reasonable conclusion has been reached," she told the BBC. |
"But, until I know exactly what I will get from it, it's difficult to have a really solid opinion." | "But, until I know exactly what I will get from it, it's difficult to have a really solid opinion." |
The government said recently payments would be made by the middle of 2011. | The government said recently payments would be made by the middle of 2011. |
An independent commission has been set up to advise on the best way to allocate payments. | An independent commission has been set up to advise on the best way to allocate payments. |
The Equitable, one of the UK's leading private pension companies, closed to new business in 2000 and subsequently came close to collapse. | The Equitable, one of the UK's leading private pension companies, closed to new business in 2000 and subsequently came close to collapse. |
It became evident it had been telling savers their polices were worth far more than was actually the case. | It became evident it had been telling savers their polices were worth far more than was actually the case. |
When the situation was crystallised following a High Court test case in 1999, it was forced to reorganise its finances by slashing the value of its savers' policies to bring them into line with reality. | When the situation was crystallised following a High Court test case in 1999, it was forced to reorganise its finances by slashing the value of its savers' policies to bring them into line with reality. |
This meant not only reducing the value of the pension pots then being accumulated by savers, but also meant reducing the pensions already being paid to some of its customers. | This meant not only reducing the value of the pension pots then being accumulated by savers, but also meant reducing the pensions already being paid to some of its customers. |
An Equitable Life Bill has now been introduced to Parliament which will pave the way for the Treasury to make the compensation payments. | An Equitable Life Bill has now been introduced to Parliament which will pave the way for the Treasury to make the compensation payments. |
The former High Court Judge, Sir John Chadwick, who was asked by the previous Labour government to devise a much more limited scheme, aimed only at those who had suffered "disproportionately", recently published his report. | The former High Court Judge, Sir John Chadwick, who was asked by the previous Labour government to devise a much more limited scheme, aimed only at those who had suffered "disproportionately", recently published his report. |
He was asked to work out how much money was lost because of government maladministration in the way the Equitable was regulated. | He was asked to work out how much money was lost because of government maladministration in the way the Equitable was regulated. |
Sir John said that the investors' absolute loss should be put at between £2.3bn and £3bn, but the compensation should be capped for each policyholder at between 20% and 25% of that. | Sir John said that the investors' absolute loss should be put at between £2.3bn and £3bn, but the compensation should be capped for each policyholder at between 20% and 25% of that. |
After further downward adjustments that would have implied a total payout of between £400m and £500m. | After further downward adjustments that would have implied a total payout of between £400m and £500m. |