23/03/2017 House of Commons

conceal my interests. I would like to take the earliest opportunity to

offer a full apology to the house. Thank you to the honourable

gentleman for what he has said. Order. We now come... I am grateful

to the Leader of the House and colleagues, to the backbench motion

on compensation for Equitable Life policyholders. The motion to be

moved by the ever present Mr Bob Blackman. I beg to move the motion

in my name on the order paper. Can I draw the house's attention to my

declaration in the register of interests as I am a co-chair of the

all Parliamentary group for justice for Equitable Life policyholders.

This saga has been going on for more than 25 years. There have been

debates in this House on many occasions and I am delighted that

the government took action as early as 2010 to actually provide

compensation for the victims of this scandal. This is a unique scandal

and there are three sets of individuals involved. I will go

through briefly for the benefit of members the issues of those three

sets of people in due course. It is clear that this is a unique case.

When I was standing for election in 2010, we made relatively few

promises and pledges as individual candidates, and one of the pledges I

made was to seek full compensation for policyholders. I can assure

those affected that I and colleagues will continue this fight until every

single policyholder has received the full compensation they are due. I

will give way. Given the failure of the regulator

to identify, let alone expose the problem, what information was in the

public domain about which even a savvy investor could have taken into

account and might possibly have alarmed him?

I thank him for that intervention and it goes to the heart of the

matter. The reality is that people who invested their life savings in

pension schemes from the time when it was possible to take out personal

pensions were persuaded by unscrupulous Equitable Life

salespeople to transfer their life savings and put their hard earned

money into a scheme that was a Ponzi like scheme. The reality is... Can I

conclude on this issue? The reality is they were promised bonuses that

were not achievable and equally, at the same time, the regulator knew

this was not achievable. All was well while the money was coming in,

but as we know, eventually all that money coming in was insufficient to

pay bonuses expected and disaster loomed. The key point is there was

no information in the public domain. The individuals affected could not

have known they were such affected, but, worst still, the regulator, who

should have overseen this, knew what was going on. The Treasury at the

time knew what was going on, but nobody took action. This was hidden

because the cost to the public purse of collapse was so immense it could

not be allowed to continue. I will give way. I thank him for

bringing this to the house again because policyholders with Equitable

Life I think have been badly treated and the finances of this country are

now much improved and it is time again we looked at the situation

regarding these policyholders. They were oversold and the value of the

policies was hyped up beyond anything that could be delivered

even at the time and I think there are many people not held to account

and it is the policyholders who have had millions of pounds taken away

not only from insurers policies but pensions.

I thank him for that lengthy intervention. I will give way in the

second. If I can answer this intervention. The reality is there

are more than 1 million victims and the total sum accepted in

compensation and accepted by the government, by the former

Chancellor, at the despatch box, ?4.1 billion, in compensation. But,

we are at the point whereby only 895,000, only received 22% of their

losses. The payments have been less than transparent. Policyholders have

no way to check the calculations made. This leaves us in a difficulty

for those who support the policyholders and I want to pay

tribute to Emag who have done diligent work on behalf of

policyholders. He outlined the regulation and

Treasury knowledge of it. This is a matter of obligation for the

government. Nobody can discard their obligations because of not enough

cash and the government has enough cash at the moment.

I thank him. I believe it is a debt of honour. I am not expecting my

honourable friend from the front bench today to announce he will pay

the full compensation, open the Treasury cheque book and pay the

full compensation today and say this will be raised today. With the

current budget and decisions made on National Insurance, clearly the

position is that the budget is not yet brought into balance. I will

conclude on this issue. In the long-running, as the economy

recovers, as my motion sets out, as it recovers, this debt of honour

should be satisfied and I think there is a way of doing this within

both the remit of the legislation and the capability within the

Treasury to do it. I thank him for giving way and he

makes a good case. I have been contacted by so many on this issue.

Of course I understand the government position but public

finances are looking better than when this hit and we have cut the

deficit by two thirds, so on behalf of my constituents, I would urge

that the government continues to look at this to see if we can help

these deserving people. I thank the honourable lady. Quite

clearly the position is that this is a debt of honour, the economy is

recovering and in the long-term we should be compensating all those in

full who suffered through no fault of their own. We are encouraging

people from across this country to invest for their retirement and

invest their savings. They should know the safeguards of the regulator

and government will look after those savings and ensure they are not

short changed in the way these vulnerable people are being now.

I will give way. May I start by drawing attention to the house as a

policyholder of Equitable Life, mercifully a small policyholder.

Does he agree that one of the most shocking things about the lack of

information accessible to the public was right up to the very end,

advertising continued, encouraging people to put their savings into

Equitable Life. I remember seeing advertisements on the tube in 2000,

weeks before it went. The position is there was

irresponsibility and I would absolve the current leadership of Equitable

Life. They have been cooperative in every way. Identifying

policyholders, assisting the government and Emag in ensuring

everyone was identified so they could be compensated but that does

not refer to the previous management will stop let's turn to the current

position we are in. I applaud the government on honouring the pledge

to provide compensation to policyholders, immediately after the

2010 general election. What was set aside then was 1.5 billion in

compensation, too little, and clearly there is still a debt of

honour. The current position is that there are effectively four sets of

people involved, the with profits annuities of which there are 35,858

who have been paid out 336 million. There are the pre-92 with profits

annuities who were left out of the scheme deliberately because the

government took the view that those taking out a policy before the 1st

of September 1992 were outside the compensation limits. Back to me was

wrong. Those people could not have known this scandal was going on

either. I'm delighted the then Chancellor

provided a payment of ?5,000 to 9000 people, and extended that to ?10,000

to those on pension credit. We also then had the non-profit annuities.

There's over a million of those. They've received busbar ?749

million, but only 22.4% of their actual losses -- thus far. This is

an arbitrary number. It cannot be right that if the government has

accepted it is responsible for the pensions of those individuals, they

get an arbitrary level, merely because that is the balance left

within the money that is set aside. All I would ask my honourable friend

on the front bench to do is to say, we will keep this under review and

as the economy recovers, that compensation should be paid out.

Policyholders in my constituency who did the right thing have been left

in dire straits through no fault of their own. Given that even modest

additional sums can make a difference, does he agree it must be

possible at the very least to do better than 22% and link that to be

improving public finances? I thank the honourable gentleman for that

intervention and clearly we can do better and we should do better. It

is unfair on those individuals, many of whom will be approaching

retirement now and seeking to draw on those pension pots, who will not

know what security they have in their old age. Just to get 22.4% is

absolutely unacceptable and quite clearly is going to continue, this

battle will continue until such time as they do receive the compensation

they are due. I'm grateful to him and all the work he's done over so

many years, he deserves huge credit. Would my honourable friend agree

with me that at such a time when we quite rightly are seeking to show

the UK is the world financial Centre, that at the same time, we

need to show that we have the best possible regulation, and that in a

case like this where regulation has let people down that we are prepared

to stand behind them? I trust my honourable friend will make a

further contribution to the bait tick-macro debate later. That is the

position and we should ensure that London remains the financial centre

of the world and we can be trusted to look after people's investments.

I have a number of constituents affected by this. He talks of people

reaching their old age. Is it not simply the case that the

compensation is too little, there is also an increasing risk it comes too

late? The longer justice is delayed, the greater justice is denied?

Unfortunately as we know many of the individuals affected by this scandal

are deep into old age. They may be very vulnerable. Regrettably there

are fewer and fewer every day. Every day that goes by without them

receiving their proper compensation, maintains the scandal. And actually

the obligation we have. I will give way... My honourable friend just

made an important point about the significance of London's

international reputation. Part of that depends on the strength of our

regulatory environment. Does it follow as a matter of good policy as

well as common decency that when there is a massive regulatory

failure, government should be seen to stand behind those who lose out

in consequence? I absolutely agree with that comment and I think it's

quite clear. I think there is something I just want to say about

the commitments we've made. As I said, the former Chancellor accepted

at the dispatch box the reality that, and he said, I accept the

findings of the Parliamentary ombudsman in full. Let us be clear

what the findings of the ombudsman were at the time. Those were that

the ten years, ten years, there had been a decade of regulatory failure.

That has been responsible for the losses suffered by pensioners when

Equitable Life collapsed. She recommended in a report that was

2872 pages long, that the government should restore complainants to the

position they would have been in had maladministration not occurred. The

reality is, that I believe that we should ensure that we honour those

commitments we've made. But we honour the position. I note my

honourable friend on the front bench is, of course, a former member of

your party group and a strong supporter of justice for the

Equitable Life policyholders. I know he will want to do the best he can

put those people that have suffered such losses. So, simply, Mr Deputy

Speaker, he asked today is this. For the pre-1992 annuitants, the most

vulnerable, the people who are no longer with us every single day

there are fewer and fewer of them. To be compensated in full, even

though this is outside the scope of the legislation. It would cost the

government less than ?100 million for full compensation for those

individuals. With the people that have just received 22.4% of their

losses, a plan set out so they will receive full compensation. It may

take time, I'm not expecting it to happen straightaway. It may take

time but those people should receive their compensation as the economy

recovers and possibly we should have a plan that goes in line with

recovery of the economy. That would be fair, reasonable and equitable. I

conclude by saying this. I look forward to my honourable friend

giving us some commitments, giving us some clear guidance on what the

Treasury will do, to assist those people who invested and did the

right thing. It is a debt of honour that this House owes to those

individuals, and we will not rest, those of us that support these

honourable people, we will not rest until such time as they receive

every penny piece of the compensation to which they are

entitled. The question is, as on the order paper, I'm going to bring

Fabian Hamilton in but can I just say, if we take around ten minutes,

everybody will have an equal time, including for the second debate as

well. It is a pleasure to follow the honourable member for Harrow East

with whom I've worked for the last few years as the co-chair, something

I should declare to you, the co-chair of the all-party

Parliamentary Group for justice that equitable pensioners. Mr Deputy

Speaker, I am very sad that after so many years of debating this issue we

are back once again today. Talking about the continuing losses suffered

by hundreds of thousands of equitable policyholders. They

invested as we've heard, in the world's oldest life assurance

company in the belief they would be able to have a comfortable old age.

Instead after a lifetime of saving they find themselves sometimes

destitute, and often much poorer, through no fault of their own. Would

he agree with me that the issue is not just one of restitution or those

of our constituents lost out but it's also about confidence in the

whole savings culture for future generations, which is so important.

Yes, I would indeed agree with the honourable member and I will go on

to say something about that. I think there's also a third dimension, that

is we have a moral duty to ensure that those Equitable Life

policyholders are compensated. How have we arrived here at this point

in time, 17 years after Equitable closed its doors to new investors

and seven years after the last government promised to ensure that

the losses incurred by Equitable policyholders would be compensated.

My first involvement in the Equitable saga was to speak in an

adjournment debate that I tabled in Westminster Hall on the 24th of June

2009. In that debate, I spoke about the serious issues facing all our

constituents since the crash of Equitable Life following its

inability to meet its obligations and promises made to investors over

the decades. Equitable Life had started selling pensions as early as

1913, but it wasn't until 1957 that the society started selling its now

infamous guaranteed annuity rate pensions which promised a clear and

unambiguous return on capital invested. But carried on until 1988,

when the society realised its rates were so good, and so far ahead of

the rest of the market, that they were in reality totally

unsustainable. In December 2000, Equitable Life was. To closed to new

business, by that time, yes indeed. In that year, there was, to me, the

rather surprising Appeal Court judgment that those who had put more

money in and got greater rate of return is, totally missed the point

that all policyholders were members of the society. The senior judges

didn't understand fully the consequences of what they were

doing, it was unfair on too many. I completely agree with the point he's

made. Unfortunately, time limits me on what I can actually say about

that judgment so I want to go on and talk more about what we need to do

now. By the time that Equitable was full to close it had more than 1.5

million members, one of the bigger societies in the world. In July

2008, the Parliamentary ombudsman... Wouldn't he agree that many of those

members work in modest employment, with a modest earnings, often in the

public or voluntary sector? I would agree and it's a point I'm going to

make. It's the very reason I took up this cause in the first place. Like

many of my colleagues, I believed that Equitable was an investment

that only the wealthy maids, and that people with hundreds of

thousands to put into their pensions were going to seek to make a huge

return, when in fact I discovered the average pension pot was just

?45,000. It was ordinary people say things ?20 or ?30 a month over a

working life that were investing in Equitable. Does the honourable

member agree with me that there is an important business case that the

government to do more, because if people can't support themselves with

the income they expected, that burden will fall on the state, all

the more reason to do more now. That's absolutely it very good

point. People had been encouraged to save exactly because neither the

state nor the individual wanted to depend on the state always coming up

with the money that was necessary to enable them to have a full and

enriching retirement. It was about self-reliance. That is the very

core, I think, of the arguments today and the arguments we've had

over many years in debates in this House. But people helping to provide

for themselves and being encouraged to invest in Equitable whether

people that have been let down. Not the wealthy, the ordinary person,

putting aside a little bit more for their retirement so they could have

a comfortable retirement, and that has now gone. He mentions over 1

million people that were subscribing to the Equitable Life pension funds.

Over 900 of those people in my constituency, many of whom are just

about managing people, doing the right thing but now just about

managing at the very best. This is about maladministration of previous

governments. Is it not incumbent on this government to at least open the

door a bit more to an improved offer, possibly over time, to make

this a fair deal for those savers? I thank the honourable gentleman to

his intervention. One of the great things we do in this House is work

on moral issues like Equitable together across party lines. I'm

proud to work with the member of the Harrow East, because he has done an

awful lot. I pay tribute to the work he's done. I've done my best to work

collectively and collaboratively. We need to do this together but it is a

moral issue, as I will elaborate. In July 2008 the Parliamentary

ombudsman published her first report into Equitable Life. On the 11th of

December that year, the public Administration Committee produced a

report entitled Justice Delayed. It said over the last eight years many

of those members and their families have suffered great anxiety as

policy values were cut and pension payments reduced. Many are no longer

alive and will be unable to benefit personally from any compensation. We

share both a deep sense of frustration and continuing outrage

that the situation has remained unresolved for so long. Well, Mr

Deputy Speaker, there was no shortage of reports, just a shortage

of justice for those who, through no fault of their own, had suffered

huge losses in the life savings they had accrued over years of hard work.

At the core of the problem is the fact that Equitable Life simply

couldn't meet the obligations it had made for itself, because it had made

no provision for guarantees against low interest rates and policies

issued before 1988. It therefore declared that bonuses out of all

proportion to its profits and assets, following the ruling of the

House of Lords in July 2000, the society effectively stopped taking

new business in December of that year, which spelt the end of the

Equitable. Over 1 million found they had severe

cuts in their bonuses. The average investment for the 500,000

individual policyholders was just ?45,000, which according to Emag,

even at its height, would have yielded no more than ?300 per month.

In its December 2008 report one of the recommendations of the public

administration committee stated, we support the ombudsman's

recommendation for the creation of a compensation scheme to pay for the

loss that has been suffered by members as a result of

maladministration, where regulators have been shown to fail so

thoroughly, compensation should be in duty, not a matter of choice.

Reacting to the government lack of response to the ombudsman report,

the conservative opposition stated its determination to introduce a

Equitable payments Bill should it form a government after the

forthcoming general election of 2010. One of the coalition's

agreements plans for legislation included such a Bill, which was

introduced in June 2010, shortly after the government took office. On

the 10th of November at committee stage, I tabled an amendment

supported by my honourable friend which would have included the

pre-1992 with profits annuitants which had been excluded from the

proposed compensation scheme at the bell. The Bill offered 100%

compensation to all with profits annuitants who took out annuities

after September 19 92. And 22% to every other policyholder. Many

members of this House from all sides felt it was inherently unfair as the

date of 1st of September 1992 was somewhat arbitrary and this small

group of with profits annuitants was the eldest and by far the most

vulnerable. Many of them would not even live to enjoy the compensation

were it to be paid and that has been borne out. My amendment to the Bill

simply red, payments authorised by the Treasury under this section to

with profits annuitants shall be made without regard to the date on

which such policies were taken out. The public bill offers help me to

draft that. The debate on the amendment took just over two hours

but was lost by 76 votes in favour to 301 against that strongly set out

the case to include the pre-1992 with profits annuitants. The Bill

received Royal assent in 2011 and the compensation scheme was set in

motion. At first it was slow, but it picked up over subsequent years and

by January 2015, over ?1 billion had been paid to 896,000 policyholders

although more than 142,000 were still to be found and could not be

traced at the time. The scheme has now closed. 37,000 with profits

annuitants, or their estates, were issued payments by the scheme. These

payments totalled ?271.4 million. In conclusion, I have to give credit to

the previous coalition government for introducing a compensation

scheme from which the majority of policyholders received 22p in the

pound, which is a lot better than nothing. When we examine the

compensation paid at that time to investors following the collapse of

Icelandic banks in 2008, for which every investor received up to

?50,000 of losses in full, the Equitable scheme looks less than

generous. Given the average policy involved a total sum invested

?45,000, it seems unfair to Equitable policyholders they did not

receive more, which is why Emag continues to campaign for full

compensation for all Equitable policyholders in a reasonable way,

in line with the growth of the economy, not all at once, and is why

so many members from the house continue to support that view.

Equitable policyholders have been patient. They understand the

recession at the time meant austerity and a huge shortage of

money available for many parts of government and the state. But what

they cannot understand is that as the economy grows, they are denied

further payments against their real losses. I have heard heartbreaking

stories from individuals, constituents, some of whom have lost

everything, including their homes, all because of Equitable's failure

and the company's quote, catastrophic regulation. I have said

this is fundamentally a moral issue. When government is supposed to

protect the life savings of individuals who have been encouraged

to provide for themselves, then it has a duty to ensure the losses

incurred be adequately compensated. This obligation I believe should

come above pet projects such as perhaps HS2 and maybe Trident

renewal. Or the whole fabric of trust in the state will be damaged,

which I believe is what has happened in this case. Finally I urge all

members of this House to continue to uphold the cause of Equitable

policyholders and try to restore their faith in the ability of this

House as the elected representatives of the people properly to compensate

victims of one of the greatest financial scandals of our age. I

believe we have a moral duty and should not be afraid to carry it

out. Point of order. I should have

declared I have a small equitable life policy when I intervened. We

are grateful for his corrections. It is a pleasure to follow the

honourable member and indeed my honourable member, -- friend, the

honourable member for Harrow East. They deserve credit for the work

done. They have worked absolutely tirelessly on this issue. As the

honourable gentleman has said, the bulk of Equitable Life losers were

modest people who had bought into what successive governments of all

parties had told them was the right thing to do, to save for retirement

and put something aside and it will benefit. They did what they were

told to be the right thing. Why did they lose? Because of catastrophic

errors by the company and also by a catastrophic error of regulation.

The government creates the regulator and the government ultimately must

bear the responsibility for that failure. I do not mean it in a

partisan sense, but morally they must be prepared to do so. I give

way. I have resisted the case for full

compensation on the basis of two arguments and one of them is that if

the returns were too good to be true, investors will to have spotted

that. However, I have begun to wonder if this argument is any

longer sustainable, because if the benefits were too good to be true,

the regulator should have spotted that. This is a regulated market in

which ordinary investors ought to have had confidence.

He is absolutely spot on. That is precisely the gravity of the

regulatory failure, not just the process that went wrong, it is the

fundamental failure to see it was something put into the market that

should have been ringing alarm bells. That is an important point

and that is why the case the government should respect, proper

compensation, is all the stronger. It was a superficially attractive

argument put out early on but it was too good to be true so you do it at

your own risk as it was said at one time, these people were lawyers,

barristers, solicitors, consultants, the comfortable middle-class. It was

not the case. I have dozens of victims of Equitable Life in my

constituency and most are indeed everyday modest people who had jobs

that enabled them to put a little aside and they had done so in good

faith and they were let down by the system, and it was a government

regulated system that let them down. That is why the obligation is very

strong. My honourable friend referred to the work of Emag. I

should declare my interest on this. I pay tribute to constituents of

mine who have galvanised our own local group of victims and they work

hard to keep people, many of whom are elderly, in the loop as to what

is happening and that is a valuable service. It has been said, the

amount of information available in the compensation scheme, the way it

worked, was less than user-friendly to put it mildly. There was a lack

of transparency and quite difficult for people in difficult

circumstances to navigate. The work Emag did to help them is important.

The moral case I suggest is overwhelming. It is right to the

coalition government moved when the previous government sadly had done

nothing. It is fair to say something is better than nothing, but that is

not really a sound basis for policy in morality or in terms of good

governance. Something was given, circumstances would permit now to

give more. The distinction between...

I will give way. Do you agree the policyholders do not regard what

they are entitled to as compensation, they want back the

money they saved, their own money they put into their long-term

pension savings and which they believed would be returned with a

reasonable return when they retired? We use compensation in the technical

sense rather than in the morale at he of what has happened. It is right

that the honourable member referred to it as a Ponzi scheme. In other

generic -- jurisdictions it would be regarded as a fraud. The system

supposed to protect them failed. At the time very compensation scheme

was introduced finances were difficult. Things have improved and

it is not unreasonable to think those people should be compensated

more now than was the case. The distinction between the pre-1992 and

post, it was at best arbitrary. The case is made in a legalistic and

try, desiccated, calculating machine, type of terms. It does not

hold water to anyone who looks at it through a measure of human decency

and broadness in terms of the impact on public confidence. I think the

government let itself down under that arrangement, though it was

better than nothing. Now we can do better and that is what I urge the

government to do. As well as the moral case there is the important

case to be made about the importance for this country of good governance

in the financial services sector. I am an advocate of Britain's

financial services. 36% of constituents work in that sector. It

is a massive earner for the country and a jewel in the economic crown.

It succeeds because of its reputation for integrity and that

reputation is fundamentally based upon the strength of its regulatory

structures. When there is a failure and it is not followed by a proper

level of redress for those who lose out, the confidence in the financial

sector is dented and damaged. As we emerge from the European Union, I

regret that, but that is where we are, the international reputation of

the financial services sector will be more important. It is in our

national self-interest to ensure we seem to be 100% behind that those

who invest prudently into our financial institutions, the Shoreham

sector is something Britain is a world leader in, but this failure

had potential to damage it. It will always be held against us unless we

do something to get this right. In the scheme of national benefit this

sector brings to the country, doing justice to the Equitable Life losers

would be a drop in the ocean financially compared with the

rewards for the financial services sector and what it brings in.

Perhaps that reason the government would think again, if not out of

moral decency, also perhaps out of long-term national economic

self-interest. Thank you. May I stop by paying

tribute to those who have secured this debate, particularly the

honourable member for Harrow East who has worked so tirelessly on the

half of the victims of the Equitable Life failure. -- on behalf of the

victims. It seems to me the Equitable Life policyholders have

been failed by three bodies. First of all they were failed by the life

insurance scheme they invested in. Secondly by the regulator. And

thirdly, they've been failed by the government who haven't done enough,

although I should acknowledge this government and the previous

government did actually move to do something. That should be

acknowledged in this debate. The point of the debate is they have a

duty to do more, for moral reasons, and also, as others have said, to

underwrite confidence in the financial sector across the UK. In

Edinburgh South West that financial sector is extremely important. Many

of my constituents work in the financial sector in Edinburgh and

it's the second largest financial sector in the UK after London. I

have a number of constituents who are victims of the Equitable Life

collapse. I want to say a bit about two or three of their personal

experiences this afternoon. Others have already dealt more eloquently

than I can with the nub of the issue but basically, it's the shortfall,

the difference between which the previous Chancellor, the amount he

created in his 1.5 billion scheme. At the same time he admitted the

total loss was 4.1 billion. There is a difference of 2.6 billion. It

seems to me that in the great scheme of things, that isn't a huge amount

of money. When we look against the background of the principles that

should govern this situation, it's not a huge amount of money either. I

just want to briefly Ali to the fact the government initially attempted

to exclude all of those who took out schemes prior to 1992 -- briefly

alluded. That would have been the oldest, most vulnerable and most

incapable of making their voice heard in this situation. The

government's sticking plaster doesn't cover the full amount is

lost and continues the fairness to those least likely to be able to

continue the fight against the injustice. Every government has to

choose its priorities. The government's choice to fail to fully

compensate those who are unlikely to be alive long enough to provide the

sustained pressure necessary to reverse this decision, is most

unfortunate. I would pause to say that this is not the first time this

government has failed on compensation, or failed on

regulation. I have been present in the chamber for the debate about the

losses of the investors in the context income fund and I have

constituents who have suffered as a result of that also -- Connacht

income fund. There is also the issue of the women who made investments in

the future according to the rules they understood to be the case at

the time. I've been receiving messages reminding me to mention

them, reminding me that they have suffered a similar injustice. I want

to just say something about the effect upon three of my

constituents. I'm not going to name them because for reasons of personal

privacy they would prefer not to have their names mentioned. All call

them A, Mr B and Mr C Mr a started to run his own business in his 40s.

He took up three pensions, to fit himself and one for his wife who was

a partner in the business. When Equitable Life became unable to

support itself and deliver on what it promised, him and his wife lost

their guaranteed annuity rates as the company tried to avoid

liquidation. At that stage they were only getting 50% of the rate they

had been promised by the company. When the coalition government

announced its plan for a compensation scheme, Mr A expected

to be reimbursed to a degree that would at least allow him to lead the

sort of like he'd hoped for in his old age when he took the scheme is

out in the 1980s. However, what happened to him was when he was

compensated he realised he had only received about 4% of the money owed

to him, and his appeal was successful in that it was upheld by

the independent panel. The recalculation has never been carried

out despite a strenuous effort of my predecessor. Mr A still doesn't even

have the 50% compensation that he expected to receive. This means that

him and his wife had had to lower their expectations of what they

expected of their old age. They've had to use the equitable relief

scheme to release funds on their home, to help them manage. This is

something they wouldn't have expected to have had to do and they

planned against doing. The second argument I have used to resist full

compensation is that we would be requiring taxpayers, and I accept

the annuitants where taxpayers, but we would be requiring taxpayers,

many of whom would never have been able themselves to afford the

payments we are now compensating the annuitants. However, given the

evidence we've been producing about the modesty of so many of the

annuitants, that has affected the argument. But equally, I wonder if

it is sustainable that justice should be subject to a means test.

If I may say so, he's obviously thought this through carefully. I

think the conclusions he has come to and the conclusions he is moving

towards on his second concern are very wise. As somebody else pointed

out, the whole purpose of having a regulator is to spot when what's

been promised is not realistic. In our democracy with checks and

balances whether regulators, ordinary investors are entitled to

assume that if what was a very well-respected and reputable company

makes certain promises and the regulator doesn't say is dangerous,

these won't fly by night investments so far as my constituents were

concerned. They were investments in what was a very old and well

respected company. I just want to say a bit about Mr B, the second and

to men who came to see me recently about this issue. He's his 80s now

and his memory is fading a bit. He was a shopkeeper, just the kind of

small businessman that the Conservative government purports to

support, and indeed, the Scottish National Party also are a party that

encourages entrepreneurialism and small businesses. It's in the

interests of all of us that such entrepreneurialism be encouraged. Mr

B to cut his Equitable Life policy 40 years ago, and he has suffered

hugely. He told me that he, whenever he thinks about what happened to him

and the losses he is sustained, he said he finds it hard to describe

the pain that it makes him feel when he thinks about it. He ran a shop in

a particular area of Edinburgh and a lot of his customers were

professional people who had also invested in the scheme and told him

it was a good thing. He proceeded with all due caution. He said to my

office that what he feels he's looking for is not very much, just

for his rights and his reasonable expectations to be respected. He

wanted me to make it clear today that he feels the current situation

of and the compensation underlined his belief that ideas of trust and

bond, which he says used to be in his opinion so important investment,

to have no place in the modern world of financial transactions. It's very

unfortunate that an elderly gentleman such as Mr B who has

worked so hard all his life should have reached that conclusion. He's

also very anxious that this stage late on in life, if he isn't able to

pay the debts which the Equitable Life scheme should have covered,

he's going to lose his home. And Mr C, another constituent, his losses

are pretty substantial. He told me he believes his losses are upwards

of 200,000. Mr C was a shopkeeper and he feels that, as he's getting

old now, in the year could be his last and time is quickly running out

to find the justice which he deserves. Today I'm making a

heartfelt plea to the Minister on behalf of constituents such as Mr A,

B and C, to look at the situation again. I did write the Chancellor in

of the last budget about these matters, and the Minister was very

generous in his reply and dealt with matters in some detail. I realise

that to a certain extent, his hands may be tight. What I want to do

today is to make a plea for him to go to the Chancellor, to revisit

this issue, so that the compensation payments can be considerably

increased, for all our constituents, particularly those in the position

of Waspi, B and C. Because it's the right thing to do, it's the moral

thing to do and it's also in the interests of us all because it will

increase and underlying confidence in the financial sector which is so

important to the UK going forward -- Mr A, B and C. I'll be brief as

we've heard so much wisdom and common-sense from all the speakers

until now. I just wish to make three points, the first is around equity.

People have spoken about this being the right and the moral thing to do.

As my honourable friend from Harrow said, it's the equitable thing to do

and indeed it is. If we look at the situation now where we are about to

enter negotiations with the European Union, over what our

responsibilities are towards pensioners in the European Union in

the future, we will, I know, as the government, take the right and

responsible attitude to that and fulfil our commitment is, as the

Prime Minister has said. If that is the case it should be the case for

our own pensioners through Equitable Life. We've heard, I'd heard from

many constituents of the problems that have arisen as a result of the

promises and commitments they understood have been made to them,

which haven't been fulfilled because of a massive failure, principally by

the organisation itself. But also by the regulators. Let's not forget

that when we invest in organisations such as this, it's the regulators on

whom we place reliance. We don't have the knowledge, the experience

to know whether the promises that have been made and underwritten by

the regulator can be carried out. We expect them to be carried out. Let's

not forget this also occurred after the debacle over the bank, credit

and commerce International in the 1980s where I believe... ?20

million, and many others lost a lot of money as well. At the time, the

phrase, if it looks too good to be true, it is too good to be true. One

would have thought that if even someone such as myself and others

took that message on board, that the regulators certainly would have

taken that on board and looked very carefully at it. It's absolutely

equitable that we should do whatever we can and more than has currently

been done for these investors in Equitable Life. I do want to pay

great tribute to the coalition government for the action they took

in very difficult times, to set aside ?1.5 billion in order,

partially to right this wrong. What I want to see if this government

build on that, as the economy has improved. The second area is over

this confidence in financial services. The UK is a world centre,

whether it's in London, Edinburgh, Leeds, Birmingham, it's a world

centre for financial services. As my honourable friend has said, it is

something on which many of our constituents, not just in London and

the south-east, but right across the UK to depend for their living. And

behind all financial services lies one simple word, trust. If a

country, if an organisation cannot be trusted, they will fail.

Fortunately, the UK has a very, very long and, in my view, excellent

reputation for the trustworthiness of its financial services sector.

It is more important the blemishes that occur are set right and set

right quickly and properly. The third point is, over long-term

security, people want to even their wealth out over the course of their

life which is why they invest in pensions. They forego spending now

in order to have money to spend later when they do not have an

income from employment and that is a worthy thing to do, something we

should support and we supported through the tax system. We also

support it through regulation. That is why it is vital in a case like

this, as has been said, if this was a matter of an investment fund for

people with millions to invest, who know what they are getting into and

the risks involved, that is one thing. This is another thing, about

people who expected pensions of perhaps ?300 per month, not at all

the kind of money you can go on a lot of cruises around the world on.

This is to top up the basic state pension, as every government has

always wanted us to do almost for the last 100 years. In addition, I

believe the country needs to do something similar. I have long

advocated our country invests in a sovereign wealth fund where by we

put aside money every year and don't just rely on a pay attitude and if

you like, a Ponzi scheme for the national Health Service pension, and

the state pension. We need to consider whether we should turn our

way of looking at public finances more into the way we would expect

pension funds to run their operations whereby future

liabilities are met with future assets. That would allow us, when we

get hiccups like this, to be able to compensate for them in full.

I think in this debate the house will want to hear from the minister

at some length at the end of the debate, because I notice people are

asking questions which they would like the minister to answer. I want

to make sure there is enough time for the minister to speak at the end

of the debate. I hope that colleagues will now restrict their

remarks to 8-9 minutes. I aim not to disappoint, as always.

I would like to thank the Backbench Business Committee for securing this

important debate and also congratulate honourable members for

Harrow East and Leeds North East for their hard work over a number of

years trying to secure adequate compensation for everybody who has

asked out as a result of this scandal and the issue of Equitable

Life and those who have lost out has been debated in this House more than

15 years. There is a great deal of cross-party working on this matter.

The Equitable Life members group and others have campaigned to ensure

this issue is not kicked into the long grass and I'm pleased we have

an opportunity to press the case for those who lost out. After a long

battle I appreciate the action the government has taken to date. Those

who have been affected by the scandal. As we have heard today and

from our constituents, many policyholders remain short changed,

with a payment of less than one quarter of compensation to which the

ombudsman found they would be entitled to. The second ombudsman's

report said the aim of the compensation scheme should have been

to put people back into the position they would BF malice administration

-- would be if maladministration had not occurred. At the core of this

issue... Certainly. I am grateful for giving

way. He is making powerful points, as have all speakers in the course

of this debate. I have had a great number of letters from constituents

who correspond about money they have lost all relatives have lost. The

honourable member has rightly said they are receiving only 22% of

compensation they would have expected. Is it not also the case,

that we are dealing with pensioners and losing about 15 pensioners per

day and perhaps if the government looked again with the increasing

economy that more could be done for the people who have lost out, it

needs to be done sooner rather than later.

We are dealing with people who are getting on in years. It is estimated

about 15 policyholders a day are dying before matters are resolved.

We see this in a range of issues. The longer people wait for justice,

the harder it is to appreciate justice has been served. At the core

of the issue many people feel after all these years justice has not been

done. This is the message that has come across from constituents.

People who have worked all their lives only to find the pension pot

has failed to materialise in the manner they were promised. They

believed would have car. This means people who have spent decades

working for a comfortable retirement have had it denied to them. It means

some people are downsizing houses, remortgaging their homes even in old

age to make ends meet. That is not what we want for people who have

contributed throughout their lives. He is speaking powerfully as always

and is right to focus on those who will not have the opportunity to

recover the money lost unless the government were to change its mind.

Would he agree there is a message to young people and those of us less

young like myself, that we must set the example that saving and

responsible action during a working life should be rewarded and there is

a danger here, if we get this wrong, what we are doing is setting a

lesson that people should not bother to save, because after all, it is

not worth it? I'm sure he has many years to go

before he reaches retirement, but that is central to what we are

debating. We are entering an era where retirement ages are going to

increase and there is more onus on people to take responsibility for

people securing their retirement. If we have a system people are not

confident in, it will not work, which is why compensation should be

adhered to. One of my constituents said to me, what I find sickening is

Her Majesty 's government, no matter which party is in power, have

refused to act on the ombudsman's findings. That sums up where we are

and it is a point made by many members already. I hope when the

minister responsible update us on what the government are doing and

focus on what those individuals who feel the system has short-change

them are going to be expecting in terms of good news. It is not just

those individuals we have heard about today, but for the whole

system, the trust we have in it and should have in it to secure our

future. I believe there is a need to restore confidence and build trust,

not justice for those but for everyone. It was said there are

uncomfortable parallels between this issue and the Waspi campaign and how

people have had that confidence shattered by what they considered to

be broken promises by government and institutions be placed trust in. We

need to encourage people to plan for their retirement and contribute to

their pensions. What kind of message does it send out to people if the

government failed to properly regulate a provider and then failed

to compensate people fully for their losses? It is not just trust in the

finance sector at stake but trust in politics itself. The 2010

Conservative manifesto included this comment that links the issues in a

neat way and it was, we must not let the mis-selling of financial

products put people off saving. We will implement the ombudsman's

recommendations to make fair payments to Equitable Life

policyholders. I think members agree it was a worthy aim and a matter of

debate today whether that pledge has been met in full. I am conscious of

the time. We want to hear from the minister. What has been said today

by many has summed up the situation but I want to finish on what I think

is a key point. A failure to correct the wrongs of the past will lead to

a failure to secure confidence in the future. It is not an

exaggeration to say the erosion of confidence this episode has

engendered could have a greater impact in the long run than the cost

of the full compensation. I hope the government will do the right thing

for policyholders and to restore confidence in the system of savings

and pensions. The honourable member described it as a debt of honour and

that is an excellent way of putting what our obligations are. We need to

act honourably and correct this injustice. One final thought is that

given the age of many of the policyholders in this situation, it

is clear the adage justice delayed is justice denied is never more true

than in this situation. I am pleased to contribute to this

debate to keep pressure on behalf of my constituents who have been hard

hit and who deserve better. I thank the honourable member for bringing

the debate and for his continued work on behalf of those affected.

Like many, I remember the reassuring adverts that must have attracted

many people. Telling us it was an Equitable Life. Clearly it was not.

If there were any equity in life we would not be here today on behalf of

constituents whose lives have been changed to damaging way. I

understand the steps taken so far but their confidence in government

and financial regulation has been shattered. Constituents like James,

nor Howard, in my constituency, Howard is 81 but was a self-employed

businessman and worked hard for his living and did the right things to

provide financial security. Howerd ended up working he was 72. He felt

he had done everything to make sure he had good financial plans in place

and would not be dependent upon the stated his retirement. All his

well-paid for plans are in tatters. Howerd says, all I am looking for is

the repayment of what I and hundreds of others are owed and who could

argue with that? I named only two constituents but like other members

present, there are many others affected and similarly failed by

what is a toothless regulated system that has let them down.

She is making some great points. Would she agreed given the hardships

some constituents have faced and the injustices and the age of some of

our constituents are reaching, would she express our admiration at their

determination to keep the issue on the political agenda, and continuing

to fight injustice? I think he has made an excellent

point. We should commend them for their work at keeping this at the

forefront of our minds. A cynic might wonder about this situation,

like those affected by either collapse of the core fund, whether

there is a strategy of dragging out action to make sure there are fewer

of those impacted still with us. It is not good enough to have the sorry

saga continued. The government must deal fully with outstanding

injustices felt by these unfortunate policyholders. We need to grasp the

nettle and acknowledge the role that has been done and the impact on

people'slives. It is essential we see action taken but also we need to

make sure people can maintain confidence in pension provision and

the financial and regulatory bodies. I am delighted to give way. I am

grateful. She makes a powerful point. Many constituents of mine

have also been in touch to say they see it as such unfairness, that they

worked all their lives, paid into a scheme they thought was the right

one, and that sense of unfairness is compounded by the fact that other

schemes and banks that have failed have been bailed out by the

government and policyholders refunded. Does she agree their

grievance is perhaps all the more because so many others have been

bailed out? I think it is a point well made. Equitable Life policy

holders do feel this is particularly hard and it is understandable they

do. We need to deal with the issue of compensation, which can only

happen when we have negotiated sums involved in at the moment we are not

there. After all this time the government needs to deal with these

justice these people feel, that they have worked hard and saved, done all

the things the government emphasised as being responsible and the way to

guarantee security retirement. Not only did their hard earned money

vanished that the government has failed to protect them and to

compound things, failed to bring forward fair compensation. I

recognise there has been compensation but those affected

understandably feel it is not good enough nor right for them to lose

out because the government claimed financial constraints. Why should

they pay the price for the failures of Treasury regulation in the 90s.

The government must realise the damage these scandals caused a

public confidence. Surely righting wrongs like those suffered by

Equitable Life and Connacht investors

As we've heard from a number of honourable members this afternoon

that are mostly women, marching on Parliament, because the UK

Government has whipped the pension rug out from under their feet, and

the Equitable saga goes on and on. If this government is serious about

pensions, and people saving for their future, they must listen and

they must act now and deal with this Equitable Life scandal once and for

all. Can I congratulate her for setting the scene. In the time I'd

been in this House since 2010, he has always been a champion Equitable

Life policyholders. Today some seven years later, we find we are still

fighting. The honourable gentleman fairleads north-east isn't in his

place but he needs to be commended as well -- for Leeds North East. As

both members have said and we all support continued attempts to ensure

that both our constituents and my constituents aren't left financially

ruined after doing their best to save for a rainy day. We haven't got

a big representation in the chamber today but that doesn't take away

from the importance of the debate or lessens the impact of what we are

about to say. All of the honourable members have been a valuable

contribution to this debate. All seeking the same thing and all

looking to the Minister, in relation to delivering the answers but we

want. We have to convey to you what our constituents are telling us and

we need the government to know exactly where we are. Before I came

to this House, when I was a member of the Northern Ireland Assembly, we

had debates on this matter as well. We also had debates on it and

correspondence on it when we were councillors. It was the long number

of years before we came to this House. In other roles further back

we were probably following these issues as well. People always say,

saving for a rainy day. The rain is falling now. And it's the

government's responsibility to hold out the umbrella. The newspaper

overhead is starting to wear out. I believe it's time to the Minister to

step up to the mark and do the right thing by these favours. Dozens of

correspondence from my constituents, some of those who are quite

honestly, I didn't meet any of my constituents who are recipients of

Equitable Life and what in a higher income brackets... Those are the

people we are talking about. The impact of these people are greater.

They don't unfortunately have time on their side either. My

constituents and those across Northern Ireland has spoken to me

and my colleagues and this leaves an opportunity to make their case, and

we'll do the same thing. Whilst I am saying that this government has paid

money out, let's give credit where credit is due, at present almost ?1

billion and is commendable. It's also an indication of the fact

government has a responsibility and a further responsibility that needs

to be fulfilled. We are currently at an ?89 billion deficit scenario and

and congratulate the government on the economic policies. I mean that,

because I've seen unemployment just in my area, I believe it's all part

of the great economic policy of the government here in Westminster. We

must seek to lower the deficit, however we must also honour our

obligations. That's what we're asking the Minister to do today, the

obligation. The honourable member for Leeds North East referred to the

fact some of the policyholders might never see this come to a conclusion,

they will live on a low income until the day they die and pass this

world. I'm just wondering, if governments have a mind to settle

and help out the savers, would it be something that could retrospectively

be passed their families? I ask the if he would perhaps consider that in

relation to my thoughts as well. I was brought up in a household that

had saving drummed into us from an early age. It wasn't just the Scots

background we had that meant every pound was a prisoner, but we were

encouraged up an early age to have savings. We've done that through our

whole life and it was good to be that way. It gives you the value of

money. And there wasn't much of it. But it gives you an idea of what we

need to do. Had a bit aside for the future was something repeated often

and is something I tried in still in my own boys. Times have changed as

well. It's difficult for my boys to buy a house and live their lives,

never mind saving their wages. Government have put schemes in place

to encourage saving but the question must be asked, why bother when we

have an example of a generation, the generation just before us and

alongside us, who scrimped and saved and die in a position where they

still have to do so, through no fault of their own -- and are still

in a position where they still have to do so. A point was made to me and

I believe it was well made, and I repeat it as such. Government

insured no savers lost out because of the banking crisis, others have

referred to it. ?133 billion was found to support the banks. 76

billion is still to be re-cooed. -- re-coop. It has been suggested that

annual losses in billions are continuing year after year.

Equitable Life savers, who did the right thing in saving for their

retirement, should have -- should not have too pay for the banks. We

look to the special treatment. I think it is an equal importance for

those equitable life policy holders, ever mindful that government has

made a substantial contribution to that. Others who followed have said

we need to do that just a bit extra. I conclude with these comments. The

facts are 2.6 billion of relative losses should be paid to the 885,000

Equitable Life victims who are still 70% short of what they are due. A

substantial amount of money for them. The pre-1982 with annuitants

to be treated the same. Equitable Life policyholders are justified in

their grievance. We in this House have been tasked with the job as

their representatives at Westminster to put their case. I believe they

are justified in pursuing their full compensation. This is the reason for

the debate today and this is the reason I am standing with those

victims alongside my other friends in this chamber from across the

whole of the UK. Altogether we are asking for justice for the Equitable

Life victims and by masking government pledge to simply do the

right thing by these pensioners. -- asking the government. At times in

this debate it seemed like a meeting of old lags. Some of us have been

debating this issue for so many years. I'd like to say, like many

others, I had lots and lots of people coming to me about Equitable

Life. I don't, I used to have, but unfortunately time has done its work

and there are now few left. People at my constituent Gertrude who is an

elderly lady who thought she had made the right choice and had a

decent standard of life in retirement, but is now living off

25% of what she thought she would get. That is very difficult.

Throughout the country, my friend from Edinburgh North and Leith who

unfortunately, the head today told me of her constituent in the same

situation. Elderly people who made the right decision and found they

had lost out. The motion before us today notes that government have

made no further funding available in the spring budget. Several other

members have already mentioned that this is very similar to the

situation with the Waspi women. One is about retirement age, one is

about the amount from private pensions. But as others have

mentioned, it brings to the same source. There is an increasing

disbelief amongst the population but it's worthwhile savings pensions.

That will cause huge difficulties in the future. If you speak to young

people today, they will say, what's the point? Look at what has happened

to others, my granny, look at what is likely to happen to me. When you

get reports like today saying the pension age is likely to go up yet

again and young people may now be working into their 70s before they

get a pension, that is continuing to undermine confidence. We are looking

at a huge problem in the future if we continue to do this. I do

acknowledge, I was here when we tried to persuade the last Labour

government to do something, and they turned their face against and

refused to do anything. I acknowledge the coalition government

and this government have grasped the Thistle to some extent, and have

made some money available. They must be given credit for that. Of course,

it took a report from the ombudsman to get the ball rolling for

compensation. She concluded that the state of the public finances were

irrelevant consideration. I suppose that's why we are still here today.

Also, part of the difficulty I think is there is a very huge difference

between the amount sought by the action group and that which the

government says was actually lost. There's no real agreement as to what

the total losses are. In a sense, unless the government came down with

a figure of 1.5 billion, and again they were citing the case of the

public finances. It's somewhat disappointing to see his letter to

the honourable members the Harrow East, the minister states, the

announcement was clear that the funding available to the payment

scheme was not a fixed amount of 1.5 billion but rather that up to 1.5

billion would be made available. Do I take that as confirmation the

government have no intention of even putting the remainder of that

amount, I understand about 140 million, towards the plight of those

who have lost out? That seems to me to be rather small-minded and mean,

and undermines the government's commitments they have shown

previously to try and tackle this matter. He might argue the pension

savings, carefully accumulated, should be safeguarded in the same

way as funds deposited in banks and building societies, and they have a

point although they shouldn't stretch it too far, because there is

a limit on that. It is worth recording in the response to the

government's original scheme the ombudsman stated, I'm unable to

conclude the government's proposal to comply with the recommendation of

the establishment of compensation scheme which I made in my report,

these are things which will go on until the government does do

something to address this sense of injustice which continues. Equitable

Life was touted as a long-established steady company and

people were encouraged, small business people, the self-employed,

were encouraged to invest their pension savings in it. I remember

when I was a practising solicitor many years ago, that Equitable Life

was considered one of the best investments. That encouraged so many

people to go in it. increasingly, as we are urged to

invest, I think we will find it difficult now to have the same look

at any pension company whilst this issue is still unresolved. It is

also clear less than half of new pensioners will receive the single

tier pension when it is introduced and therefore the issue is more

important. Pensioners now have greater freedom to access pension

savings, which will alter the pension landscape and the attitude

of savers. It may make it more difficult for companies's investment

strategies. That there is confidence and stability in pension investment.

It is not the same as putting money in a bank or building society. It

depends on the market, the type of investments made, we know.

Honourable members making powerful points. He has spoken in terms of

confidence. Would he agree there is a danger that having had members of

the public investing in what was seen to be a secure and safe scheme,

very much with the intention of doing the right thing, that this can

set a precedent where members of the public may feel investing in

pensions is not something that will give them safety in retirement?

Further that the unfairness that gives is something that is unhelpful

in terms of the pension industry as a whole? It is. That is the basis of

the point I was making. I have children in their 20s and you speak

to them about pensions. Some of us are getting to the age where we

begin to think seriously about what our pensions will bring us. When you

are in your 20s or 30s, you are looking at a long-term investment.

People looking today at the Waspi women, the Equitable Life

pensioners, do not have the same confidence people of my generation

may have had, that we were putting aside to augment a state pension.

The state pension is changing, we are looking at different ways in

which people will invest, like auto enrolment. These things require

confidence and that has been undermined because of the continuing

scandals like Equitable Life. I think the government has to look at

the bigger picture, not just at Equitable Life in isolation, but

about how we manage to get over this hump, to make sure all young people

do make a provision for the future. If we don't, it is a much bigger

problem coming over the horizon when these young people get older. When

we find they have not made the provision because they did not have

the confidence. What will we do then? They will -- there will not be

the fullbacks there are perhaps today. I urge the minister to go

back to the Chancellor and say, look, look at the bigger picture,

look how we are dealing with pensions. How do we get confidence?

If we don't, the picture will be worse later.

1.I should have mentioned, there is a recognition that for many

pensioners and parents, we need to make provision for our children

financially. We are using some of the money we have to make it happen.

Some Equitable Life holders have said they have not been able to do

that. Has he come upon that honour as well? I have a daughter on her

third university degree and I know what he is talking about. Parents

are having to use their own money in some cases for their children as

they are now, and that cuts down on what might be available for them in

the future. That is a decision they have to make and a slightly

different issue because parents made their provision perhaps, getting to

the stage where the it will come home. What is a big issue is the

future. Many young people today are not earning money, they are being

landed in some cases with large debts due to the university degrees.

That will impact on their ability to save for pensions. Let alone the

lack of confidence. I have gone on long enough so I will end at that

point. Can I associate myself with all the

comments made by members of earlier about the dreadful events that

occurred yesterday and send my condolences to all the families of

those who died and a speedy recovery to those who were injured?

It has been an incredibly thoughtful and considered debate from all

sides. I would like to thank the honourable member for Harrow East

for bringing this before us. I know he has given huge amounts of time

and commitment to this over the years and he has been incredibly

dogged along with my honourable friend the member for north-east. I

would like to thank him for that. I think you set out the situation

clearly and words were thrown in from interventions about it being a

scandal, about a matter of confidence. I think they sum up the

issue for many people. I would like to thank him for setting out the

landscape today. I would like to thank my honourable friend the

member for Leeds North East, who talked about it being a moral duty

to compensate. Those many hundreds of thousands of people in effect who

have worked on this over the years, and they talked about it being a

moral issue and question of the trust in the state. That resonates

with many of us. The honourable member for Bromley and Chislehurst

who indicated savers were told to save, encouraged to save and that

was the right thing to do and they cannot be dis benefited by that. He

talked about regulation and I will come onto that later and about alarm

bells ringing. He indicated the government providing resource would

be a gesture of confidence to the public. The member for Edinburgh

South West also raised the issue about failures of the system. He

said it was a continuation of unfairness and gave movingly in a

number of ways, her constituents' experience and talked about the

trust and bond people must have in the system. The honourable member

for Stafford talked about equity and I think he in no way meant equity

with a big E is as well. He talked about regulation should not only be

carried out but should be seen to be carried out and talked about

confidence and trust in the system and the issue of long-term security

through confidence in the regulatory process and introduced...

I will. It is alleged when Gordon Brown was put under pressure by

members of his party in the early 2000s to make compensation, he

retorted that, these aren't our people. Whether that is true or not,

he will accept they are very much his people as ours as well? These

people are all our people, basically. My honourable friend the

member for Ellesmere Port and Neston talked about the issue of

cross-party support in working on this and the appropriate action the

government in his view needs to take and said policyholders remain

short-changed. He talked about the issue for the restoration of

confidence and trust in the system and referred to Waspi. That erosion

of confidence he says may cost more in the long run and justice denied

and delayed is justice denied. The honourable member for East

Renfrewshire, referring to her constituents, now elderly and in

distress. Talked about failed and toothless regulatory system and it

is a saga that cannot continue. And Mr Shannon talking about his

constituency, looking to the minister for solutions and saying

those people are justified in pursuance of compensation.

I thank the honourable gentleman who is making a characteristically

erudite speech. Does he agree with me and possibly the honourable

member for Angus that on the other end of the spectrum it is important

to redouble efforts, there is an imperative of financial education

for young people so they understand the benefits of securing a long-term

pension income? I think that is an excellent point. I would expect no

less from the honourable member with such a suggestion. If they do that,

people have to be assured of confidence in the system. It is a

very important point. I think the minister has heard the views of many

across the chamber. From our side, we are not going to make party

political points, no cheap party political points on this matter and

credit where credit is due to the coalition in terms of setting aside

1.5 billion in a compensation fund for those who had invested in the

Equitable Life assurance Society. Most of which was invested in

pensions, and the Chancellor, former Chancellor, the scheme was closed by

2014 but he extended it with the scheme closed by midyear, last year.

I know the Emag group, who represent pensioners, the policyholders, in

February 2016, continue to call for the additional compensation, arguing

that is the shortfall in the figure. Many members have made that point

today. I know the government in the manifesto said making fair payments

to policyholders, and of course the debate goes on about what that

amount should be. It is generally accepted a ?4 billion is around

about the figure concerned. I know that the then minister indicated

improvements made since 2010 are welcomed and show the government's

long-term plan is working but the plan is not complete and we have

some way to go to fully restore public finances. I think the

minister will note that. The Chadwick report in 2010 concludes

that relative loss should be defined as those who have suffered financial

loss and the report pointed out the ombudsman recognise the loss in

policy where only partly due to maladministration, the backdrop to

cuts in policy values was a sharp fall in stock markets that all

insurers companies were forced to respond to and the inquiry argued

compensation should be assessed on the cost of maladministration as

opposed to investor losses but we are politicians and we can make

decisions and different choices than that. The minister today has been

asked to give careful consideration, do we wish to make different

decisions and choices? It comes to an important point I wanted to

raise. It has been pushed time and again and that is the question of

regulatory failure. There has been a consensus among parties that

compensation should have been paid out by the government for

maladministration and has to a degree. But of course, that issue of

regulatory failure, we are not sure whether regulatory failure continues

to exist, and so we have to push down and make sure the regulatory

frameworks we operate in this country are tested time and again

and are reviewed time and again. And of course appropriate resource has

to go to organisations who regulate to ensure that proper regulation

occurs. There are 200 insurers companies with about 150 looking at

them. That is something we have to consider. I am not saying there

should be more staff but we should take into account resources of

regulatory authorities. The scandal is not related to one particular

government. It was ignored by regulators in the 80s, as members

have said today. It is all the more important that with the knowledge

the regulatory system did not operate, that we continue to check

and check again. As was said in the second ombudsman report, the central

story of this report is that this robust system of financial

regulation was not in respect of the Society implemented appropriately.

This is consistently, fairly and with proper regard to the interests

of those affected by the Prudential regulators and those providing

assistance and advice on those regulators. I think that is

salutary. We have had scandals in the past and we have to keep a

lookout for these. Pips, the endowment scandal from the 80s, a

concern growing about the sale of leasehold in relation to view

properties. Let's not go down the path of that being a scandal, even

airlines not paying compensation for delays.

It's important we always keep a lookout in relation to the

regulatory system. I want to begin to conclude, if I made, by pushing

the question about confidence in the system and the regulatory system,

and ask in addition to that what efforts the government continues to

make to trace policyholders. Can we have a bit of an update in relation

to those people who have received compensation from the 1.5 billion

and how many policyholders does the Minister estimates are still

affected? I know this is a moving feast. And the broader steps the

Treasury needs to make to restore faith in the regulatory system. To

summarise, may be legally the government are not required to pay

the compensation, but many people today have pushed the question for

the moral imperative. That's a matter of the government going to

have to consider. Today, and in the coming months and years. Minister.

Mr Simon Kirby. Madam Deputy Speaker, can I start by associating

myself with the comments made earlier about yesterday's terrible

events. Madam Deputy Speaker, can I congratulate honourable members the

Harrow East and Leeds North East visit during this important debate.

I think it's fair to say that their tireless work on this issue and the

involvement with the all-party Parliamentary Group on Equitable

Life is of great importance to many of our constituents up and down the

country. Honourable members from across the House have done a great

deal for their constituents on this matter, and it has been a very

thoughtful debate, and I've listened very carefully to the individual

cases spoken about. I am grateful also have the opportunity to set out

what this government has done to tackle this long-standing issue.

Madam Deputy Speaker, there is a long and well-documented history on

this topic which I do not propose to go over in the limited time I have.

Instead, I want to focus on the action we have taken to make

payments to the people affected. These figures are well known. The

ombudsman's findings assess the loss from government maladministration to

be ?4.1 billion. It's worth noting that this was significantly more

than the evaluation commission by the then Labour government, and this

report rejected some of the ombudsman's findings and concluded

that only ?340 million should be paid to policyholders. This

government, in contrast, and despite the constraints facing the public

purse, agreed that ?1.5 billion would be made available, tax-free,

for payments to eligible policyholders. We consulted

carefully on how this ?1.5 billion should be paid out and reach the

conclusion that we must pay those policyholders. As a result, this

group will receive an annual payment for life with a total cost of these

payments are assessed to be around ?625 million. The ?100 million

contingency fund that is often referred to is to ensure that there

is a provision for policyholders exceeding the life expectancy cost.

The remaining, ?775 million of available funding, on the advice of

an independent commission, was distributed pro rata to other

policyholders, representing a payment of around 22.4% of their

relative loss. I recognise that for many, this was disappointing. But it

is about striking the right balance that also took into account the

position of the public finances and fairness to all taxpayers. This

point of affordability was one that the ombudsman raised explicitly in

her report, where she stated it was appropriate to take the impact of

the public purse into account when considering the funding of the

payments. Indeed, the ombudsman has written to the all-party

Parliamentary Group on this issue of the level of funding, and said that

the government's decisions on affordability cannot be said to be

incompatible with her report. I also understand that suggestions have

been made that as the economy improves, further funding should be

made available to the payment scheme. I accept that that decision

isn't incompatible with the ombudsman report. But to say it is

not incompatible with something as not to say that it follows the

spirit of it or that it is right. It does raise the point but I would say

to him and repeated again, this is about striking the right balance

that took into account the position of the public finances, and fairness

to all taxpayers. I will cover this point in more detail as I proceed. I

was talking about further funding being made available for the scheme.

But with debt at its highest level since the Second World War, tackling

the deficit and getting debt falling will be challenges that call for

long-term discipline. That is why we have never plans to reopen the

payment scheme or to review the level of funding for the scheme. I

thank the Minister because I realise time is short. When I made my

contribution earlier I made the point about the ?50,000 maximum

compensation for other collapsed banks in 2008 did receive up to

?50,000. Given that most of the funds in Equitable were around

45,000 of investment, would he not consider looking at those particular

individuals who suffered most? I was going to cover the issue. There is a

big difference between the two, and these were payment is different from

the scheme in that the government expected, and did recover all the

money paid to UK depositors, as the banks themselves were wound up, it's

not fair to compare the two. I'll move on to addressing some of the

specific issues that were raised. The honourable member for Harrow

East said that the payments were not transparent. I'd have to say that

transparency is one of the core principles of the scheme. The

methodology of the calculations published in full, along with

simplified explanation for the layperson. I'm also aware HMT have

met to discuss this and have found no errors. He asked sensibly wide

the government can't commit to paying Equitable Life policyholders

in full, when the economy is fully recovered and the debt is shrinking.

I would say that it is right that the government balances the needs of

affecting policyholders against those of taxpayers and the users of

public services more generally, at a time when the government has to

tackle a debt of nearly ?1.7 trillion, that's almost ?62,000 for

every household in this country. I think that's quite a salient point.

He also mentioned the cost of paying the pre-1992 annuitants is less than

?100 million. I have to tell him no assessment has been made of these

pre-92 losses. The government did recognise the hardship of this group

and paid up to ?10,000 as a lump sum at a cost of around ?50 million.

This was new money over and above the original ?1.5 billion. A number

of honourable members, including the honourable member for brutal raised

the failure of regulation and standing behind any failure in

financial services group. This government and the coalition

government before it have fundamentally performed financial

regulation, including and importantly, expanding the scope of

the financial services compensation scheme. The member for Leeds North

East said it was unfair that we excluded pre-92 policyholders. I

have every sympathy with the position of pre-92 policyholders and

the position they find themselves in during their retirement. However,

these policies commenced before any maladministration could have

affected investment decisions and pre-92 policyholders have instead

been affected by falling comparative annuity rates in light of the issues

that Equitable Life. I have referred to the payments of 5000, or 10,000,

if those are in receipt of pension credit, that was made in December

2013. The honourable member for Edinburgh Southeast said, I think

it's a point that may have been raised before, that the government

hasn't done enough. I do sympathise with the plight of the honourable

members constituents and I'm also glad that she recognises the

coalition government did more than any that preceded it to address this

issue. She asked me about the Chancellor of the Exchequer, the

Chancellor has been very clear in his spring budget that the scheme

has closed and there is no more money forthcoming. The honourable

member, my honourable friend from Stafford made points about

regulation. He made these points adequately and I do agree that trust

is vital, and I am proud of the reforms made to the regulatory

system. Many people say we have too many regulations, I always think

financial services are there for everyone and it's important we

provide an appropriate level of protection for everyone, big or

small. The honourable member for Elsner port and Neston suggested

that the government had ignored the ombudsman's recommendations. I have

to say the ombudsman report was the foundation of the payment scheme.

The ombudsman has written to the all-party group and whether we agree

with the expression incompatible or not, said the government's decisions

on affordability cannot be said to be incompatible with her report. He

also mentioned that 2010 manifesto, it's worth saying that payments were

fair to both the taxpayer and the policyholders with the most

vulnerable groups receiving 100% of their losses, and the scheme is

based on the ombudsman's report. I hate to interrupt his flow but I

want to take him back to an intervention I made on my honourable

friend the member for Harrow East about the regulator to identify

problems. In his response to me, he said that the Treasury itself was

aware of the problems of Equitable Life long before they actually

emerged. Does he know if that is true?

It is fair to say there were a lot of issues and things that were done

that we would do differently today. These were taken into account, in

the vast number of reports and inquiries, and are represented in

what is a fair and equitable scheme for payments. I will move very

quickly. Connacht was mentioned by the Honourable Member. I will be

meeting in the near future to discuss that issue. If she would

like to come I am pleased to meet with her to discuss it. It is

currently being investigated by the FCA. The Honourable Member for

Strangford, can I thank him for his understanding? He made a very

thoughtful contribution. He mentioned children. I would say to

him, we have to be careful to strike the right balance, that we do not

saddle our children and grandchildren with unfair levels of

debt. It is about making sure those people affected receive a fair

amount. The Honourable Member for Angus set out cases where

constituents have a reduced annuity in their retirement. I do have a

great deal of sympathy for the difficulties reduced income in

retirement causes. The Government recognises this. That is why Nu they

should receive 100% of their loss. The Government have paid out today

1.12 billion. We will pay out another 55 million, leaving a

balance, for those that can add up, of 25 million. We do intend to

provide a safety net to make sure that the payments to the most

vulnerable are maintained. Let's hope they all live longer. As such,

I don't recognise the 140 million figure. In conclusion, Madam Deputy

Speaker, I appreciate that some policyholders, that have carefully

invested for their retirement, are now not receiving the income they

expected. We have done more than any other Government to resolve the

government backed REPORTER: Part in the Equitable Life

issue. We have paid out 1.2 billion and we have supported the

policyholders left most vulnerable. I thank my honourable friend in

terms of his response to the debate. We have had a very good debate with

representatives and interventions from no less than five political

parties represented in the house. Everybody has spoken with the same

voice. This is a debt of honour that we owe to vulnerable people across

this country. We will not allow this matter to rest until such time as

those vulnerable people are properly compensated for their losses, which

happened through no fault of theirs. I thank the honourable members that

have taken part in this debate. It is good to see some fresh voices in

this debate, as well as those that have been campaigning for many

years. Can I just say to my honourable friend on the front

bench, I was disappointed that we did not get a mention in the Budget,

but there are many opportunities to come, the autumn budget and further

such budgets. It is not fair to say that the scheme is closed. The

scheme is closed to new applicants. We know that the scheme will

continue paying out for as long as those receiving compensation live.

It is absolutely open to the Government to top up the

compensation scheme so that everybody who suffered losses would

receive their proper payment. For those pre-92, he trapped annuitants,

if they received that, they would use that money in the economy, and

it would boost the economy for hard-pressed retailers. There would

be a double benefit to the Treasury. All I would ask my honourable friend

from the front bench is to go back and have a word with my right

honourable friend the Chancellor and leisure see if we can do justice to