* Government backs payout for Equitable Life policyholders
* Says payment scheme will be “swift, simple, transparent”
LONDON, May 25 (Reuters) - Equitable Life [EQL.UL] policyholders who suffered heavy losses when the insurer nearly collapsed a decade ago edged closer to long fought-for compensation on Tuesday, as the new UK government promised an independent payment scheme.
The coalition government brought into power earlier this month said it would design a “swift, simple, transparent and fair” payout plan, upholding compensation proposals made by a parliamentary watchdog two years ago that could cost as much as 5 billion pounds ($7.2 billion).
The 2008 report by parliamentary ombudsman Ann Abraham recommended payouts for more than a million policyholders who lost pension savings, but the then Labour government said it could not offer full compensation.
In a statement after the government outlined its legislative agenda to parliament, including plans for an Equitable bill, the Treasury said the compensation scheme would be designed by an independent commission.
“I am very aware of the acute concern among policyholders who have suffered loss and the desire to achieve redress quickly,” Mark Hoban, financial secretary to the Treasury, said. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a report on the government’s legislative programme, please double click on [ID:nLDE64O0VZ] For main government policies, click on [ID:nLDE64O0I8] For reaction to government plans, click on [ID:nLDE64O1CS] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Abraham’s investigation, published in 2008, found evidence of maladministration of Equitable by regulators and the government between 1988 and 2001.
She said the government should set up an independent tribunal to calculate compensation for all policyholders. And she said last year in a special report she was deeply disappointed by the then government’s decision not to compensate all policyholders in full. [ID:nL5967777]
Equitable Life, Britain’s oldest insurer with 1.5 million policyholders at its peak, almost collapse after being forced to honour unsustainable guarantees stretching back 30 years.
It eventually closed to new business, affecting more than a million people who had each invested thousands of pounds for their retirement. (Writing by Clara Ferreira-Marques; Editing by David Holmes) ($1=.6977 Pound)