Equitable Life Policyholders: Compensation — House of Commons, 2017-03-23
Topic: Domestic Commerce
Joanna Catherine Cherry (Scottish National Party, Centre-left): I pay tribute to those who secured the debate, particularly the hon. Member for Harrow East (Bob Blackman), who has worked tirelessly on behalf of the victims of the Equitable Life failure Equitable Life policyholders have been failed by three bodies. They were failed, first, by the life insurance scheme in which they invested; secondly, by the regulator; and thirdly, by the Government, who have not done enough, although I acknowledge that this Government and the previous Government moved to do something. The point of the debate is that they have a duty to do more for moral reasons, as other hon. Members have said. They should also do more, again as others, particularly the hon. Member for Bromley and Chislehurst (Robert Neill), have said, in order to underwrite confidence in the financial sector throughout the United Kingdom In Edinburgh South West, the financial sector is extremely important. Many of my constituents work in it, and Edinburgh has the second largest financial sector in the UK outwith London. However, quite a number of my constituents are victims of the collapse of Equitable Life and I want to say a little about the personal experiences of two or three Others have already dealt more eloquently than I can with the nub of the issue. Basically, it is the shortfall: the difference between the amount in the scheme that the previous Chancellor, the right hon. Member for Tatton (Mr Osborne), created—£1.5 billion—and the total loss, which he admitted was £4.1 billion. There was therefore a difference of £2.6 billion. In the great scheme of things, that is not a huge amount of money, especially when we consider it against the principles that should govern such a situation The Government initially attempted to exclude all those who took out schemes before 1992. That would have excluded some of the oldest, most vulnerable, and most incapable of making their voice heard. The Government’s sticking plaster on compensation for the pre-1992 scheme holders—an extra £50 million—does not cover the full amounts lost and continues the unfairness to those least likely to be able to continue the fight against the injustice. The Government’s choice—it is a choice; every Government have to choose their priorities—not to compensate fully those who are unlikely to live long enough to provide the sustained pressure necessary to reverse the decision is most unfortunate This is not the first time that the Government have failed on compensation or regulation. Like other hon. Members, I have been present in the Chamber for the debate on the losses of investors in the Connaught Income Fund. I have constituents who suffered as a result of that. Of course, there is also the ongoing issue of the Women Against State Pension Inequality Campaign. Those women invested in their future according to the rules that they understood to apply at the time. During the debate, I have received messages from WASPI women, reminding me to mention them and emphasising that they have suffered a similar injustice to those affected by the collapse of Equitable Life I want to say something about the effect on three of my constituents. I will not name them for reasons of personal privacy. I will call them Mr A, Mr B and Mr C. Mr A started to run his own business in his 40s and at that time, he took out three personal pensions with Equitable Life, two for him and one for his wife, who was a partner in the business. When Equitable Life was unable to deliver what it had promised, Mr A and his wife lost their guaranteed annuity rates as the company tried to avoid liquidation. That meant that they were getting only 50% of the rate that the company had guaranteed them. When the coalition Government announced their planned compensation scheme, Mr A expected to be reimbursed to a degree that would at least allow him to lead the sort of life in his old age that he had hoped for when he took the schemes out in the 1980s. However, when he was compensated, he realised he had received only about 4% of the money owed to him. His appeal was successful and was upheld by the independent panel, but the recalculation has never been carried out, despite the strenuous efforts of my predecessor, the previous Member of Parliament for Edinburgh South West Mr A still does not have the 50% compensation that he expected to receive, which means that he and his wife have very much had to lower their expectations of old age, and have had to use the equity release scheme to release funds on their home to help them to manage. They would never have expected to have to do that, and indeed had planned against doing so.