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26 January 2011

Government publishes Independent Commission on Equitable Life Payments’ Report

Financial Secretary to the Treasury, Mark Hoban, today published the Independent Commission on Equitable Life Payments’ report.

Based on the views received from interested parties, actuarial analysis, and its own judgements, the Commission has recommended the following for the allocating of funds amounting to £775 million:

The Commission recommends that, subject to practical constraints which are laid out in its advice, the following groups be prioritised in the order of payment:

The Government accepts the principles recommended by the Commission. It will now work out how best those principles can be applied in practice to policyholders, while allowing the Government to begin making payments as soon as possible.

It will publish a scheme design document setting out the practical implications of the recommendations along with other important issues related to the delivery of the scheme, such as the timetable for making payments, and the complaints and challenges procedure. The scheme design document will be made available for Parliamentary scrutiny in the spring.

Policyholders do not need to do anything at this stage. Once the scheme design has been reviewed by Parliament, the Government will be able to provide more details. 

Mark Hoban said:

"We have always been committed to making fair and transparent payments to Equitable Life policyholders, through an independently designed payment scheme, for their relative loss as a result of regulatory failure.

 "I am grateful for the work the Commission has done to establish policyholders’ concerns and have used this to recommend the principles of the payment scheme.  I welcome their recommendations and we will now use them as the basis for making payments to policyholders.

"I would like to thank Brian Pomeroy, John Howard and John Tattersall for all their hard work on this issue, which helps bring us a step closer to resolving it."

Brian Pomeroy, Chair of the Independent Commission on Equitable Life Payments, said:

"I am very pleased that the Government has accepted all our recommended principles. The Commission has listened carefully to the views of interested parties and we believe that our conclusions will deliver an outcome that is simple, transparent, and fair for policyholders."

Independent Commission on Equitable Life Payments' report (Independent Commission on Equitable L Payments' website, opens in new browser window)

Notes for editors

1.    On 22 July 2010, the Government announced that it would establish the Independent Commission on Equitable Life Payments. This was in line with the Government’s pledge to "implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure".

2.    Following the Spending Review, the Commission was asked to carry out two tasks. The first was to advise on the fair allocation of funds amongst all policyholders, with the exception of With-Profits Annuitants (WPAs) and their estates. The Government had already announced that there should be no means testing and that the estates of deceased policyholders should receive payments. The second was to advise on any groups or classes of policyholders that should be paid as a priority with regard to the timing of payments, again with the exception of WPAs and their estates.

3.     These recommendations could broadly have the following effects, subject to practical considerations:

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