Equitable Life victims to receive compensation

VICTIMS of the Equitable Life scandal are to get government compensation nearly a decade after the insurer collapsed.

Ministers are expected to announce arrangements tomorrow for an independent tribunal to assess the pay-outs.

The Treasury is believed to have conceded that regulatory failures were partly to blame for the investment firm's collapse.

Campaigners claim the compensation bill should amount to as much as £4 billion. However, ministers will be reluctant to stump up such a large sum during the economic downturn.

The tribunal is expected to rule that the Government can only be held partly responsible which will restrict the size of the final payments.

A Treasury source told the Daily Telegraph: "The company was not an innocent party. It was also clearly an issue for the authorities. But you cannot have a zero-failure regulatory system.

"We are very mindful that when you are talking about taxpayers footing the compensation bill then you need to be cautious."

Ministers have claimed they cannot be held to account for the company's failure although as chancellor, Gordon Brown oversaw the regulatory system.

However, last July a report by Parliamentary Ombudsman Ann Abraham said financial regulators had failed to oversee the company properly.

The report said the Government should apologise to about a million policyholders in Equitable Life - many of whom lost up to half their savings - and offer them compensation.

After finding maladministration by regulators and Whitehall officials, Ms Abraham called for an independent compensation scheme. Today Paul Braithwaite, of the Equitable Members Action Group, said: "We are not seeking charity, this is about a right to justice."

Treasury Chief Secretary Yvette Cooper is expected to give details of the proposals to MPs tomorrow. However, the announcement is not expected to pave the way for all policyholders to get government compensation. Instead, their losses are expected to be examined on a case-by-case basis.

Last month, the public administration committee urged the Government to accept Ms Abraham's findings and to apologise both for failures of regulation and for not conducting a comprehensive investigation. It also said any tribunal should award pay-outs only where loss was attributable to regulatory failure.