Members of beleaguered pension company Equitable Life have been assured that they will get a better compensation deal under the new Liberal Democrat-Conservative coalition government.
In the latest coalition agreement, published today, Prime Minister David Cameron and Deputy Prime Minister Nick Clegg outlined their plans to follow through with the Parliamentary Ombudsman’s recommendation for a fair and transparent compensation scheme.
Under the agreement, the coalition government will set up an independent payment scheme to pay out policyholders ‘for their relative loss as a consequence of regulatory failure.’
The insurer, which was founded in 1762, nearly collapsed a decade ago when it was forced to meet guarantees on its annuities that it could not afford. Nearly one million investors saw up to half of the retirement savings lost through the company.
Equitable Life and regulatory failure
The Parliamentary Ombudsman found the regulatory bodies looking after Equitable Life, an offshoot of the government, to be negligent and recommended that it apologise to policyholders and set up a fund to repay those who had lost out.
However, many were disappointed with the Labour government’s decision to only compensate those worst hit by the Equitable scandal.
The new scheme will be headed by Mark Hoban, MP for Fareham and Financial Secretary to the Treasury.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.