UK apologies to victims of Equitable Life

16 January 2009

The UK government has formally apologised to over a million Equitable Life policyholders for failures spanning over a decade, which effectively wiped out a significant portion of life savings due to the collapse of Europe's largest mutual.

A very large number of Equitable's customers are now bracing for further disappointment, with the government having promised only limited compensation for those customers who have been "disproportionately affected".

Chief secretary of the treasury Yvette Cooper told the UK Parliament that she wished to apologise to policyholders "on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place."

Cooper said that the government now intends to set up a scheme that would make ex-gratia payments to customers who were "disproportionately affected." She said that the former Lord Justice of the court of appeal, Sir John Chadwick would aid in deciding the size of the payouts to policyholders.

The government, Cooper said, would first prioritise those customers who were the hardest hit, while warning that it could be over two and a half years before payments are complete.

Equitable Life practically collapsed after being forced to shut for new business in 2000, with the UK Parliament's House of Lords ruling that it needed to honour its financial obligations to customers holding guaranteed annuity policies. That closure left Europe's oldest mutual society with liabilities of £1.5 billion, and also caused a collapse in the value of policies.