Vince condemns “long, shabby and disreputable treatment” of Equitable Life policy-holders

by Stephen Tall on January 16, 2009

From today’s Times:

One million savers were given an apology — but no promise of early compensation — when the Treasury issued its long-delayed response to the verdict that regulators were partly responsible for the near-collapse of Equitable Life. Although the Treasury confirmed an ex-gratia scheme yesterday, campaigners and MPs condemned proposals to means-test payments.

There was anger, also, at the Treasury’s admission that it could take “significantly longer” than two and a half years before any cash is paid out. Ministers were accused of using “dirty tricks” to put off payments until after the next election. Justifying the delay, Yvette Cooper, the Chief Secretary to the Treasury, said that the level of official responsibility had still to be decided.

George Osborne, the Tories’ shadow chancellor, decided not to turn up to the debate to grill Labour over its lacklustre response. However, the Lib Dems’ shadow chancellor Vince Cable was on hand to hold the Government to account. And, as ever with Vince’s statements, it’s well worth reproducing in full:

Dr. Vincent Cable (Twickenham) (LD): I thank the Chief Secretary for her statement. I welcome the apology, and I welcome more guardedly—because we do not yet know the full details—the compensation principle. However, that comes after the long, shabby and disreputable treatment of policyholders. The endless delay and dissimulation have angered up to 1 million of them, many of whom have lost up to half their pension to the extraordinary extent that a period of maladministration that occurred largely under the previous Government has become a massive own goal for this Government. That makes it all the more surprising that the Conservative shadow Chancellor did not think it worth his while to turn up today—[Hon. Members: “What about the Chancellor?”] Well, I am here.

We are celebrating the 20th anniversary of the Prime Minister establishing his reputation as a parliamentary star by speaking for the then Labour Opposition in defence of Barlow Clowes’s policyholders. He made a passionate speech in their defence. A question that has often been asked since is why the compensation that was eventually accorded to those investors was not reproduced for Equitable Life policyholders. The answer was always that nothing could be done without an ombudsman’s report. We now have one, nine years after the company’s collapse, and it is worth rehearsing the endless delays, many of which were deliberate.

The ombudsman said that, in 2001, the then Chancellor’s delay in holding an inquiry was “iniquitous and unfair”. There was then a long period before the Penrose report and the establishment of another ombudsman inquiry. Eventually, last year, even after the Maxwellisation process, there was a six-month delay before the matter came to the House. However, it is here, and the Government have announced a compensation scheme.

Has the Treasury doctrine of compensation not changed fundamentally following what happened last year with the Icelandic banks, when people who had chased yields in high-risk accounts were fully and promptly protected by the Treasury? In contrast, prudent, careful investors in Equitable Life have been kept waiting for a highly uncertain scheme for the best part of a decade. That matters, not just because many of them have retired, but because many of them have died. The issue would never have been maintained but for the persistence of the Equitable Members Action Group, which I commend.

Finally, can we try to bring the matter to a conclusion by having an early debate not just on today’s statement and the ombudsman’s report, but on the report of the Select Committee on Public Administration and the European Parliament’s EQUI report, so that we can look forward to early settlement of many deserving cases?