AN SNP MP has blasted the inaction of UK Government ministers to tackle the “historic injustice” of the Equitable Life scandal.
Alyn Smith, MP for Stirling, spoke about the crisis affecting thousands of Scots during a debate on the subject today.
He highlighted figures provided by the Equitable Members’ Action Group that show 135,700 people across Scotland, and 2300 in his own constituency, are owed on average £3,700 each following the near-collapse of the oldest mutual insurance firm in the country.
One of the country’s worst financial scandals, the downfall of Equitable Life happened more than two decades ago but thousands of people are still out of pocket.
Equitable Life acquired for £1.8 billion
In 2010, George Osborne allocated £1.5bn for compensation to those who had lost money – £2.6bn short of the total owed.
The problems were created by ‘with-profit’ plans, which are meant to smooth out the ups and downs of the stock market by adding guaranteed bonuses each year. However, Equitable miscalculated and found itself unable to honour the promises it had made.
It was forced to close its doors in 2000, with a black hole of more than £1billion in its accounts.
During today’s debate, Mr Smith said: “This is a historic injustice, but there are daily consequences for hundreds of people across Stirling, thousands across Scotland and 890,000 people UK-wide.
“Sadly, a number of policyholders have died still suffering the losses that were not their fault.”
He directly challenged the minister John Glen, economic secretary to the Treasury, about what he would do to help those who are due compensation.
Mr Glen told MPs that the Government compensation scheme closed five years ago.
He said: ” As we have heard and grasped again today, this is a complex and technical subject, the history of which has been very well documented over many years.
I should also remind members that the Equitable Life payment scheme closed to new claims over five years ago, so nothing has changed since that previous debate two years ago.
“Many of the speeches made today have covered the long and sad history of this matter. I do not propose to revisit all of that this afternoon. I do, however, want to remind Members that the Government took more action than any of their predecessors to resolve this issue and committed significantly more funding than any other.”
He continued that some investors “remain disappointed” and “would like to see further funds made available” but added: “The Government have been clear and consistent in saying that this issue is closed and no further money will be paid out. “This is in line with the ombudsman’s report, which was explicit about having no expectation of the full amount being paid.”
Speaking afterwards, he said the UK Government was “tin-eared to this continuing injustice”.
He explained: “This is a historic wrong but has daily consequences for thousands of people nationwide in terms of lost chances and money that should be providing reassurance and comfortable retirements in our economy instead being in the pockets of greedy and incompetent spivs.
“I also back a call for an investigation by the Public Accounts Committee of the House of Commons, but I have to say this has been investigated to death and the facts are not in dispute.
“The Parliamentary Ombudsman, the Penrose Inquiry and the European Parliament’s Petitions Committee have all produced volumes of evidence that the policy holders were let down through no fault of their own. The UK government accepts the case and the failure, but has not made good the losses in full and that should be rectified.
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“People must feel safe in investing for the future – indeed it remains government policy that people should be saving for their retirements, but this whole affairs undermines trust in the system so has real consequences for the integrity of the UK savings regulatory structure.
“The Minister’s response today took mealy mouthed to new levels, and I had hoped for better.
“It is disappointing that the UK Government, having let down so many people across Scotland, continues to ignore and belittle their plight.”