Wednesday, 24 February 2010

An extraordinary meeting

Just come back from an extraordinary meeting about compensation for Equitable Life policy holders who lost out due to 'maladministration' by the Financial Services Authority.

The meeting was organised by the all-party group Justice for Equitable Policyholders. We were moved at the last minute to a smaller meeting room, and by the time 40-50 MPs had crammed in it was very much standing room only.

The 'witnesses' were the Treasury minister Liam Byrne, and Sir John Chadwick, who has been asked by the Government to advise on appropriate compensation for policyholders.

One of the main complaints raised was how long it is taking to get compensation payments made to policyholders, not least given that thousands have already died without seeing justice.

We were told that Sir John would produce his final recommendations in May, and that the Treasury would respond within a fortnight. However, there could be many further stages before the first payments were made, and Liam Byrne would not commit himself to any timetable. He said that if the compensation was simply cash lump sums they could perhaps use the DWP to pay out the cash, but if the compensation was in the form of 'financial products' (eg a top-up pension?) then it would all be much more complex and they might even have to go out to tender.

On a positive note, Sir John said he did not want to have anything to do with a 'means-tested' scheme, and the minister said he was not inclined to go down that route, both for reasons of practicality and of justice. But this prompts the question as to how those who have been 'disproportionately affected' will then be defined?

Also on a positive note, both the Minister and Sir John said that they envisaged that the estates of deceased policyholders should in principle benefit from any compensation scheme.

When the Minister and Sir John left, the new Chief Executive of Equitable spoke up and expressed support for policyholders. He revealed he had repeatedly sought a meeting with the Treasury and had had no response. He implied that he thought the whole process was dragging on far too long, and pointed out that when his own industry had had to sort out pensions 'mis-selling' they had taken a lot less time to do so.

I can't remember the last time I saw an all-party meeting with dozens of MPs cramming into a room, nor such a united view that the injustice suffered by policyholders had gone unresolved for so long.

One final point. I asked about the scale of compensation. Sir John said he couldn't put a figure on it, but would come up with a formula into which the data would be put. Liam Byrne said that they would indicate publicy how much the full cost of Sir John's scheme would be. But he then said there was 'no blank cheque' and that the Treasury would cap compensation. So the sequence of events is that hundreds of thousands of policy holders lose out, some many years ago, the Government denies responsibility, the Ombudsman finds in their favour, the Government partially rejects the Ombudsman's report, the action group go to court and get the scope of the scheme widened, Sir John comes up with a scheme and then at the end of all that the Government may simply say we can't afford it, here's how much we can spare.

Doesn't feel like justice to me.