Momentum is growing in the fight for justice for the one million savers who lost their life savings in the Equitable Life scandal.
Victims, of what was described as a “Ponzi scheme”, should be compensated in full after two decades of being cut off from their cash, politicians said during a debate in Parliament yesterday.
MPs called for £2.6bn in payouts for the almost 900,000 victims who held a pension with the insurance firm. They were robbed of a comfortable retirement after a black hole was revealed in its finances in 2000.
Politicians said the failure of Equitable Life was partly due to governmental failures and the state had a duty to pay out.
Bob Blackman, Conservative MP and leader of the Equitable Life parliamentary campaign group, said: “They were promised proper and full compensation. But this hasn’t happened.” Victims have recouped just 22pc of their losses, which total more than £4bn. Some have died in the interim, so will never see their money returned.
Campaigners said the £1.5bn compensation paid by the Government in 2010 was insufficient and has left tens of thousands of older people facing retirement poverty.
MPs have launched a fresh campaign for justice, with around 200 members from different parties in support. A debate on the subject was originally due to take place in March 2020 but was pushed back due to the pandemic.
They also called for more transparency from the Government about how compensation was calculated. Some victims, it was revealed, were grossly under-paid due to errors made by the Treasury. One pensioner was told he was to receive £17 when in fact he was due more than £8,000.
Heather Wheeler, MP for South Derbyshire, said: “This pain needs to stop.”
Mr Blackman added: “These victims were typically not rich. They were teachers, nurses, civil servants and shopkeepers.” The average victim had less than £20,000 in their pension pot.
One victim, who is in his 80s, lost more than £250,000. Some were forced to work for years longer than expected, well into their 70s.
Alyn Smith, MP for Stirling, said: “It was effectively running a Ponzi scheme, but it was not marketed as such.”
Equitable Life was the world's oldest mutual insurer prior to its closure. It offered savers “with profits” pension plans that were supposed to deliver consistent and strong returns to savers, sparing them from market volatility.
However, the firm closed its doors to new customers in 2000 when a black hole was discovered in its finances. Eight years after an inquiry revealed that the Treasury had failed to monitor the firm’s activity and the Government subsequently agreed to compensate former customers.
The payout was smaller than expected, due to stretched state finances at the time.
John Glen, Economic Secretary to the Treasury, said the Government had been clear and consistent in its statement that the issue was closed. He added that the Treasury had published its methodology for how compensation was calculated in full and that no errors were found in that methodology.