Treasury financial secretary Mark Hoban has confirmed the Government is on track to meet its commitment to start Equitable Life compensation payouts in June.
Speaking at a Westminster Hall debate last week, Hoban said: “I made an oral statement in the House last July, that we would start to make payments before the end of the middle of this year – that is, before the end of next month – and it remains our intention to do so.”
The coalition agreement, published in May 2010, committed the Government to compensating Equitable Life policyholders for relative losses arising from the regulator at the time, the Department of Trade and Industry, failing to pick up maladministration at the firm.
The Government accepted the ombudsman’s finding that relative losses amount to £4.1bn but in October’s spending review Chancellor George Osborne announced £1.5bn would be made available for compensation.
Hoban said: “The ombudsman herself has acknowledged, the impact of the scheme on the public purse has to be taken into account.”
Under the compensation scheme, £620m of compensation will go to 37,000 with-profits investors fully compensating them for relative losses, but 10,000 policyholders who annuitised before 1992 will receive nothing.
The Government says it chose this cut-off date because before that time there was no maladministration which could have affected policyholders’ investment decisions.