Equitable Life policyholders are set to be handed £1.5bn in compensation 10 years after the collapse of the insurer, reports suggest.
Investors who lost money will receive around a third of Parliamentary and Health Service Ombudsman Ann Abraham’s initial recommendation of between £4bn and £4.8bn compensation when George Osborne announces the outcome of the Comprehensive Spending Review on Wednesday.
However, the figure is £1bn higher than Sir John Chadwick’s recommendation of £400m – £500m made in July this year.
Hargreaves Lansdown head of pensions research Tom McPhail says policyholders should “take the money and move on”.
He adds: “Undoubtedly many Equitable investors will still feel let down by this settlement, having been led by the Parliamentary Ombudsman to expect a compensation package of somewhere nearer to £5bn.
“If a settlement had been made before 2008 the it might perhaps have delivered a more generous outcome but the world has changed, across the economy spending is being cut, taxes are rising and jobs are being lost.”
This follows the publication of a report from the Public Administration Committee last week urging the Government to avoid basing its decision on the timetable of the CSR.
The report says: “We regret that despite the Government’s commitment to meet the Ombudsman’s recommendations that it did not properly explore the possibility of amending Sir John’s terms of reference back in May. Had this change been made then it would not have significantly altered the timescale for delivering compensation.
“We therefore recommend that the Government re-engages Sir John Chadwick to establish what conclusions he would reach under terms of reference which reflect all ten of the Ombudsman’s findings.”