Equitable Life (Payments) Bill

I start by referring to the closing question from my hon. Friend the Member for Nuneaton (Mr Jones). He will be aware that in July we published proposals to strengthen the regulation of retail financial services, including pensions, which I hope will go some way towards reassuring people that we have learned the lessons from the past and put in place a much more stable and robust framework for the regulation of long-term savings. I am grateful for the opportunity to discuss, first, the role of the parliamentary ombudsman in developing our policy on the payment scheme. Her work has been central to our approach. I also want to focus on with-profits annuitants and those who took out their policies prior to September 1992. These issues have been raised particularly since our announcements in the spending review. I hope that I can bring some clarity to the treatment of different groups of with-profits annuitants. At the spending review, my right hon. Friend the Chancellor announced that about £1.5 billion of funding will be provided for the Equitable Life payment scheme. As hon. Members have said, that is more than four times the figure produced by the Chadwick process, which was set in motion by the Opposition. The funding includes the full cost of losses to policyholders with with-profits annuity policies—approximately £620 million—which will be paid through regular payments. That amount is to cover those with with-profits annuity policies, whose policies started between 1 September 1992 and 31 December 2000. As hon. Members have indicated, those who took out with-profits annuity policies prior to 1992—in fact, not just with-profits annuitants but anyone who took out a policy prior to 1 September 1992—are excluded from the scheme. The Government are committed to implementing the ombudsman's recommendation to introduce a fair and transparent payment scheme to Equitable Life policyholders for their relative loss as a result of regulatory failure. That is what the ombudsman asked us to do, and that is what we are implementing. The Bill authorises us to make payment under the scheme.