---

Equitable Life

As a number of Members have observed, this matter has been dragging on for many years. After all the years that I have spent dealing with it, I have a file full of letters and reports that would choke an elephant. Like other Members, I have many elderly constituents who are affected by the collapse of Equitable Life, and, sadly, some have died waiting for justice. Other Members have also made a point with which I strongly agree: that the Equitable Life crisis is part of a much more general crisis of confidence in savings and pensions. If we do not get this right—if we do not demonstrate that people can expect justice when things go wrong through regulatory fault—we shall have a serious problem with persuading people to save for pensions and their own future. Many of my constituents, like those of other Members, have approached me and asked, "If the Government can bail out the banks, why will they not do anything about my problem with Equitable Life?" We can argue about the macro-economics, the economy and the need to bail out the banks, but it is a reasonable question. However, there is a better analogy to be made, although I appreciate that it is not exact. The Government instituted the Pension Protection Fund. They rightly took action to help people who found themselves in danger of losing out when company pensions were becoming insolvent—ensuring that they received a large proportion of the available funds so that they would not face poverty in retirement—and to shore up the sector. It seems to me that the same principle should apply in the case of Equitable Life. Equitable Life was effectively a pension scheme for, in particular, many self-employed small business people. Those people invested in Equitable Life policies because Equitable Life was seen as a large and very sound company. Many financial advisers pushed those policies over many years, especially—as was pointed out by the hon. Member for Richmond Park (Susan Kramer)—to small business men. Now those people find that their pension pot has effectively disappeared, or at least been severely reduced. What is the difference between them and those whose company pension funds become insolvent, other than the fact that they are losing out partly because of a failure of regulation? Indeed, in many ways they are in a stronger position than others to demand compensation. That is particularly true in view of the fact that, at least for part of the time involved, the regulator of Equitable Life was the Treasury. I was deeply troubled by what the Minister said in his opening speech. He said that there was no obligation for compensation to be provided. I cannot believe that that is the case, given that the Government were effectively the regulator for at least part of the time. I understand to some extent the Minister’s concern about the impact on public funds of compensating all Equitable Life policy-holders who have lost out as a result of the failure of regulation, but I feel that to impose the scheme that the Government are proposing goes against natural justice. If a loss has been suffered through maladministration, surely the victim of that maladministration is entitled to compensation regardless of his or her personal circumstances. There is a question that still hovers over this issue. It is to do with the possible means testing of the victims of the Equitable Life collapse. The Minister has been asked on many occasions in the debate to define disproportionate loss. It is not at all clear what that means—how it will be determined and what it means for people. Given the Minister’s comments, it seems to me that in the circumstances under discussion, the concept of disproportionate loss clearly amounts to a means test applied to the person who has suffered a loss from the failure of Equitable Life. Even if that is the case, it is still not clear how the concept is to be determined, so we need clarity. Is the Minister talking about a disproportionate loss on a particular class of investment or is this about the personal circumstances of an individual? We need to know. The Minister said that the Government’s position was an attempt to speed up the system, and after 10 years it could certainly do with some speeding up. He attacked the alternative system involving a tribunal by saying there would have to be a case-by-case investigation—but if the Government are determined to impose a concept of disproportionate loss and that is to be conducted through a means test on the individual, how will that be done unless each case is gone through separately, looking at the loss suffered and the personal circumstances of the individual? It therefore does not seem to me that imposing this strange concept, which is nowhere explained, will speed up the system at all. I fear the system will grind even closer to a halt. Equitable Life policyholders have waited 10 years for some justice. We have inched forward slowly. In January, I spoke in a debate on this issue and I described the Government’s position as being like that of an old lag appearing in a criminal court who starts with an outright denial, but as the evidence accumulates reluctantly accepts he will have to plead, and then makes a half-hearted plea and tries to wriggle out of the consequences of his actions later. That is exactly the position the Government are in. Even after the judicial review, they tried to spin things to suggest that they had in some way won it. It was very clear that they had not. The judge ordered that this matter be re-examined. The Government must throw up their hands and admit that there is a responsibility here, and introduce a system that is clear and fair, and will quickly deliver for Equitable Life policyholders. I was disappointed in the comments of the hon. Member for Fareham (Mr. Hoban), who opened for the Conservatives, because their policy on this is unclear. From the comments made, it seemed to me that if by any chance they were to form the next Administration nothing much would change, because the hon. Gentleman was unwilling to answer straight questions about how they would deal with the situation. It seemed to me that if the Government manage to get a system up and running by the time of the next election, the Conservatives would just continue it. I ask the hon. Gentleman to make it clear what the Conservatives’ position will be. If a system is up and running by that time, will they reopen it and look at the tribunal system, and give real justice to Equitable Life policyholders?