Equitable Life compensation plans questioned - Money - News - Moneyfacts


Equitable Life compensation plans questioned

Equitable Life compensation plans questioned

Category: Money

Updated: 27/07/2010
First Published: 27/07/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Parliamentary Ombudsman has criticised the plans for compensation for those affected by the near collapse of Equitable Life.

Last week, Sir John Chadwick published his final report into the affair and suggested that compensation payments were likely to total around £400 million to £500 million.

Despite finding that the total loss suffered by policyholders was somewhere between £2.9 billion and £3.7 billion, the report proposed that compensation should be capped at 20% to 25% of that amount.

Given that around one million people were affected, compensation could be as low as £400 per person.

Responding to the report, Ann Abraham, the UK Parliamentary Ombudsman, said the proposals appeared to be 'an unsafe and unsound basis on which to proceed'.

In a letter to all Members of Parliament, she continued:
"It seems to me that those proposals, if acted upon, would not in any sense enable fair and transparent compensation to be delivered."

Describing the report's terms of reference as no longer relevant to the Government's commitment to implement her recommendation, she added: "In studying the Chadwick report I have noted that it misinterprets central parts of the conclusions outlined in my July 2008 report and has ignored others.

"I find these flaws particularly concerning, providing as they do the basis for some of the central and more controversial proposals within the Chadwick report."

Savers who lost out as a result of the insurer's problems have been told they can expect to receive some compensation next year.

An independent commission has been put together to advise how to best allocate payments to policyholders.

The proposals put forward in Sir John's report, while not binding, give some indication as to the level of compensation that Equitable Life customers can expect to receive.

It was also confirmed that compensation will not be means tested and that monies would be passed on to a policyholder's estate if they have passed away.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Would you spend more for a character property?

We all have our own ideas of what makes a dream home, and for many, character features are at the top of the list. But how much more would you be willing to pay for those kinds of additions – and could they even help you save money in the future?

A quarter of Brits have fallen victim to a scam

Think you know how to spot a scam? It may not be as easy as you’d think, with 25% of Brits admitting that they’ve been the victim of one in the past, and a further 73% are concerned about being scammed in the future.

Brits’ bad spending habits revealed

Many of us like to think that we’re good with money, yet there are often things that get in the way of regular saving and financial security. Solution Loans has taken a look, and has identified the bad spending habits that leave us in the red.