- Written by Paul Rees
The United Kingdom Treasury has come under renewed attack over the snail’s pace of its compensation plan for Equitable Life policyholders amid growing fears that the scheme is floundering. Mark Hoban, the Financial Secretary to the Treasury, was forced to admit to Parliament last week that less than 1,000 Equitable customers have received payments since the payouts began at the end of June.
Less than £1 million has been paid out, against a target of £500 million by next June and a total of £1.5 billion, Mr Hoban conceded, in a response to a question from the former Chancellor Alistair Darling.
Mr Hoban said that the average compensation payment was £676, less than the £800 to £1,000 that was originally projected. The highest payout so far has been for £17,416.18, he said, insisting that the pace of payouts would be “ramped up” over the coming months.
The Government has promised to compensate one million Equitable Life policyholders whose savings sank in value when Europe’s oldest mutual almost collapsed more than a decade ago.
However, policyholders, led by the Equitable Members Action Group, have consistently criticised the Treasury for both the low agreed payouts and the pace of the plan.
Paul Weir, Emag’s spokesman, told The Times yesterday: “The Government’s delivery of compensation is frankly pathetic. One third of the way through the scheme and they have sent just over half a million pounds to less than 1,000 people.
“All this talk of ‘ramping up’ rings hollow — if they maintain their current trajectory we’ll all be dead before we get a penny.”
The Treasury has regularly stated that the scheme would start slowly in order to ensure the accuracy of payments, arguing that it will speed up sharply as the process gained momentum.
Four months since the scheme began, however, and with an estimated 15 policyholders a day dying, there is little evidence that payouts are accelerating. However, Mr Hoban insisted that the Treasury was making “good progress”.