Govt can't calculate Eq Life comp for extra 10,000 annuitants

The level of compensation due to 10,000 Equitable Life customers who bought with-profits annuities before 1992 would be "impossible to calculate", Tory MP Jonathon Evans says.

During a debate on the Equitable Life (Payments) Bill by the Committee of the Whole House, Evans responded to an amendment tabled by Labour MP Fabian Hamilton to pay compensation to pre-1992 annuitants.

Hamilton proposes another £200m of compensation should be made available for the 10,000 pre-1992 annuitants.

He said those who annuitised before 1992 have been unfairly excluded from the government's proposed £1.5bn compensation package, which he claims is "still insufficient".

"It is essential that companies providing products can be trusted to deliver," Hamilton said. He added the September 1992 cut-off date, applied to annuitants who will not be compensated, is "artificial and unfair".

Hamilton said the cut-off date only exists because Equitable Life claims there are no records of bonuses paid to policyholders before that date. However, he argues chairman of the company, Ian Brimecombe, has since said this is not the case.

The Labour MP added the Parliamentary Ombudsman said nobody would have taken out an Equitable Life policy after July 1991 if proper regulation was in place. This would mean anyone who took out a policy between 1991 and 1992 should also be eligible for compensation.

This money should not be taken from the existing £1.5bn package already in place, but half from compensation promised in the next Parliament, and the rest from government reserves.

However, Evans replied there is no way to accurately and fairly calculate the compensation that would be due to pre-1992 annuitants by today's standards.

"If we unpick the financial arrangements back to the 1980s, we would have to go through how Equitable Life was giving guaranteed annuity returns and record bonuses," Evans said.

"That was what happened in the 1980s, and it cannot really be gain set. People may already have been oversupplied with bonuses."

Hamilton replied compensation is a "moral obligation" of the government.

He added there would be "relatively few" pre-1992 claims and there "must be records of which bonuses were paid during the 1980s".

After the amendments proposed in the Whole of House Committee have been read and debated, the Equitable Life Bill will pass through a report stage and a third reading this afternoon. It will then be passed for three readings in the House of Lords at a later date.