Equitable Life Policyholders: Compensation

Richard Fuller Excerpts

Thursday 22nd October 2026 Westminster Hall

[Richard Fuller (North Bedfordshire) (Con)]

It is a pleasure to serve under your chairmanship, Ms Furniss. We know that issues of injustice can take an awfully long time to reach a resolution in Parliament. It is important that people who have or feel that they have suffered an injustice at the hands of the state should have worthy champions who have the doggedness and stamina to continue to make their case, so I am delighted to congratulate the hon. Member for Leeds North East (Fabian Hamilton) on securing today’s debate.

As has been noted, the issue goes back through this Labour Government, previous Conservative Governments, the coalition Government, the Brown Government, all the way back to Blair. Let us take a moment to think about the individuals who have already been waiting two decades and more for what they would see is a full resolution. As a Member of Parliament myself for periods of that time, I have had a sense that this matter is unfinished business.

I was interested to listen to some of the comments. One issue that was raised, most notably by the hon. Member for Brentford and Isleworth (Ruth Cadbury) and my hon. Friend the Member for Christchurch (Sir Christopher Chope), was on regulation and the role of regulators. On the different perspectives and remedies, I think I am closer to the one suggested by my hon. Friend. The hon. Member for Brentford and Isleworth made the point that regulators are being hollowed out. I would say that on average they have greater scope, greater funding and more people. There is an issue with their focus, but more importantly, the structures to hold regulators to account are insufficient. There is no annual review of each regulator that is performed as effectively as in other areas, so I would encourage the hon. Member to press that point to improve our system of regulating the regulators.

[Ruth Cadbury]

I respect the shadow Minister’s views, but adequate powers and adequate resources go together. Too often since I have been in this place I have heard again and again that regulators would like to have done more and simply do not have the capacity. They do not have the staff in place. That is my view.

[Richard Fuller]

I do not want to go too far off the topic, because I am a bit of a nerd on regulating regulators. We can find time later to talk about that. It was an important point, as was the point made by the hon. Member for St Ives (Andrew George). I am glad he did not make a party political point, but it is a relevant point that the Labour party’s position in opposition was that the compensation was not sufficiently substantial.

I want to make three broad points in the lead-up to questions on each to the Minister. The first point I want to establish is that making changes to the settlement is not set in stone; it is a matter of Government choice. I want to give an example, which I raise solely for the purposes of talking about choice on pensions, not to talk about the decision that was made, because it is about choice. This is about mineworkers’ pensions. The incoming Labour Government made the choice in the case of the mineworkers’ pensions to move the surplus that had been accumulated in their fund to the mineworkers rather than back to the taxpayer—back to the Government. So it was a use of otherwise public funds that resulted in a boost to mineworkers’ pensions of about 30% to 32%. That was a choice.

I just ask the Minister to consider this. It was a choice by the Government to boost pensions that were already being paid “in full”, and yet the Government seem to have no choice about people who had an 80% decline in their pensions. It might strike some as odd, with a different set of values, to treat one differently from another. I would be interested in the Minister’s thoughts on that, but the point that I am trying to make is that this is a matter of choice for the Government.

My second point leads from a quote given by the Minister’s colleague, the Financial Secretary to the Treasury, who said on this matter in September 2026:

“There are no plans to reopen any decisions relating to the Payment Scheme or review”.

That is an interesting phrase, because part of the conditions around those decisions are couched in different wordings of the phrase—that the settlement amount was determined in consideration of the “position of public finances”. That was stated way back in 2008 and also when the settlement was announced in 2011. It was alluded to again in 2016. Given that the Minister’s colleague said there are no plans to reopen any decisions, can the Minister confirm that it is still the case that considering the state of the public finances is a live factor that is encapsulated in that?

What I mean by that question is, should there be a change in the public finances, would there then be scope for the Government to change their mind? That is an important point. I do not want to lay out a false hope, but the settlement amount was decided specifically in consideration of the public finances at the time. Times now may be better or worse, but they are certainly different. When we hear the Minister’s response or read the statement made by the Minister’s colleague saying that there are no plans to reopen any decisions, it is important that it is clear that they are still open to consideration if the public finances change.

I want finally to return to what the hon. Member for Leeds North East said in his excellent speech about unallocated and unspent moneys. He said that if funds have been allocated but are not needed to meet the liabilities for which they were intended, then they should be used to compensate people who have still not received full redress. That really is a question about what those unspent funds would do. That partly encompasses the reserve and partly encompasses unallocated moneys. In the big scheme of things, it would be very helpful if the Minister could confirm that it is the intention that those moneys in that envelope will be reallocated to policyholders, rather than being swept back into general taxpayer money.

The last thing we want to come out of this debate is the Minister being unclear with Equitable Life policyholders, who in some cases have lost 80% of their pensions already, or suggesting that if there are moneys left in the envelope, which was set at a particular level at a particular time because of the state of public finances, any surplus moneys will be squirrelled away and given to the Government again. I would be very grateful if the Minister could answer those three questions.

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

It is always a privilege to respond to a debate under your chairmanship, Ms Furniss. Let me start by thanking my hon. Friend the Member for Leeds North East (Fabian Hamilton) for opening the debate. He was referred to as a limpet earlier, but he has been more proactive than that in his campaigning on this issue over the years. It is an important issue to him and to lots of other hon. Members. I should echo the point he made at the beginning about the right hon. Member for Goole and Pocklington (David Davis), who is not in the Chamber but who has been focused on this issue for a long time. Members have campaigned on this issue with tireless energy and kept the issue in the spotlight.

I want to reflect on some of the astute points that several hon. Members made. The truth is that it is not possible to restore trust entirely—certainly, not in the firm that was involved in this among the people affected, but also probably in the regulator, but hopefully Members’ campaigning has restored trust in local representation and the campaigning energy of local representatives.

The issue is even more important to the thousands of Equitable Life savers who were affected. The point, which was well made by the hon. Member for Christchurch (Sir Christopher Chope) and others, about the human effect is one that I am sure everybody in this Chamber has at the front of their mind. Those affected included my grandfather, and I have met lots of other constituents who were members of the mutual before it disappeared. I have also met with the action group, which many hon. Members have also met with. We have all heard about the kinds of human impacts that hon. Members have set out well today.

On the big picture, several hon. Members, including my hon. Friend the Member for Leeds North East and my hon. Friend the Member for Bracknell (Peter Swallow) talked about the importance of people having trust in pensions. This is a particular part of the pension system, but the point also applies to the entire pension system. That is something I take very seriously indeed as the Pensions Minister. I was up in Liverpool at the Pensions UK conference last week talking in those exact terms about how our task is to make sure that we address what is today, if we are honest, too low a level of trust in pensions. That is true of both state and private pensions. It is our job to rebuild that trust. That includes how, in some parts, pension scams are on the rise—my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) raised that.

Obviously, the Financial Services Compensation Scheme now exists, in a way that it did not in the period that we are talking about, when we are talking about pensions operating within the contract-based part of the pensions system. That is a big change, and it is compensation paid not by taxpayers, but by the financial services industry itself. That is the answer to the specific question posed by the hon. Member for Christchurch about what happens when the regulators or, more importantly, the providers fail. The answer is that there is a compensation scheme, although we are here because there was not a compensation scheme in place—and it has caps in terms of the compensation due.

I will make some progress on the specifics of this case. Hon. Members will be aware this is a topic that has been well documented and explored over the years—the hon. Member for St Ives (Andrew George) set out the role of the sabbatical for him in the period in which that has taken place. The Equitable Life payment scheme was established to make payments to eligible policyholders where maladministration had been found. That maladministration contributed to some savers suffering a relative loss totalling £4.1 billion. Relative loss was defined as the difference between the value of the policyholder’s funds with Equitable Life and what they would have received if they had made a comparable investment elsewhere. I am merely pointing out that that is not a cash loss; it is a loss relative to a counterfactual of having invested in a different but similar product.

That approach followed the 2008 parliamentary ombudsman’s report into the collapse, and was the foundation of the payment scheme. In 2010, the Government of the day accepted the ombudsman’s findings and chose to allocate in the region of £1.5 billion —the quote from the Chancellor at the time—to make tax-free payments to eligible policyholders in respect of the reduced returns that they received from their investments. That Government chose what they saw as the correct balance of interests between the interests of the affected policyholders and taxpayers. That is the choice that was made. I am obviously fully aware that, as we have again heard today, people are dissatisfied with that £1.5 billion and suggest that the issue should be reopened.

It is not for me to defend the decisions made by the then Conservative and Liberal Democrat coalition Government. To be fair to the hon. Member for Richmond Park (Sarah Olney), she came closest to doing so today, but other colleagues chose not to—[Interruption.] The hon. Lady chose to defend the decisions of that Government to some degree and others obviously did not. The balance of opinion in this Chamber is that the then Government made a mistake in the size of the compensation that was allocated. It is not for me to make that case, but were they here to do so, they would say that decisions need to be fair to taxpayers as well as policyholders, and they would point out that there is a wide range of people responsible for the disaster that we saw in Equitable Life, including those who were responsible for the firm through that period in the 1990s when very reprehensible actions took place.

[Richard Fuller]

The Minister is making the case that the position when that settlement was made about balance between taxpayers and policyholders was a matter of fault and responsibility. Does he not also recognise that a substantial part of that balance was to do with the state of the public finances? Will he confirm that that is still a live consideration in the Treasury that could in future lead to the settlement being reopened?

[Torsten Bell]

I will come to the hon. Gentleman’s last question towards the end of my remarks, but on his first point he is absolutely right to say that the then Government’s key consideration—when I referenced taxpayers—was the public finances. That is the point being made. That was the key driver in the decision by the then Government about how much money to allocate, rather than trying some kind of specific accounting for the impact of the maladministration per se.

Ministers at the time also noted the consistency of their decision with the ombudsman’s report—we have discussed a bit of that today—and the ombudsman subsequently wrote on this issue to the all-party parliamentary group, which I think several hon. Members present have been part of, confirming that the then Government’s decisions

“cannot be said to be incompatible with the report.”

As hon. Members know, following representations from groups such as the Equitable Members Action Group, the Government prioritised those acknowledged by all parties to be the most vulnerable—the with-profit annuitants. They received 100% of their losses. That meant that, of the £1.5 billion, £725 million was allocated to with-profit annuitants, to be paid annually over the duration of the annuity, which continues to this day. That included the £100 million contingency fund—that is the answer to the question put by the hon. Member for Strangford (Jim Shannon)—to ensure that the provision for the annuitants, should they live longer than expected, was there. That is obviously a standard actuarial process; it is what sits behind the regulation of the insurance sector when annuities are being sold. The remaining £775 million was allocated to be paid as lump sums to with-profits non-annuitants holding other products.

As for the details of how much has been spent, I can provide answers to the questions put by several hon. Members. As of 30 September 2026, the total value of payments made by the scheme was almost exactly £1.4 billion—it is just short of that figure—and that is an increase on the previous figure that the hon. Member for Christchurch cited.

I note the references in this debate to the pre-1992 with-profit annuity holders. The coalition Government excluded them from the scheme, not because they had not suffered real impacts from the collapse of Equitable Life—I think the then Government recognised that they had suffered real impacts—but because their purchase of those annuities, which is the point at which someone locks into the decision in the case of an annuity, was outside the period of maladministration, so the Government would have struggled to find a locus to make a payment in the terms of a scheme, because there was no maladministration to tie a payment to. Again, it is not for me to defend that Government. However, if they were here today, that is how they would explain the decision that was taken. That is why the 2013 decision, which was referenced by the then Government, to provide separate, tax-free ex gratia payments was the way in which the previous Government chose to proceed.

The scheme has now been fully wound down; it was closed in 2016 by the then Conservative Government. That is now over a decade ago. I suspect that hon. Members know that I cannot give all of them, or indeed all the impressive campaigners on this issue, the answer that they would like—a straight “more compensation”. I suspect that hon. Members know that that is the case. However, I want to give them what I think is the next best thing, which is a straight answer, and it is the direct answer to the question put by the hon. Member for North Bedfordshire (Richard Fuller), the Opposition spokesperson. It is that there are no plans to reopen the previous policy decisions taken by the previous Government. The previous Government made decisions given the public finances at the time. Those decisions were debated by that Parliament—some Members present were part of that Parliament, and the rest of us respect the decisions of that House.

The only part of the payment scheme in operation is the annual payments made to eligible annuitants. The scheme is on track to distribute the remainder of the funds allocated, as planned, on that basis. The right thing for this Government to do is to ensure that the ongoing payments to those eligible with-profit annuity holders—the group recognised, I think by all of us, to be the most vulnerable—continue to be made. I will finish by assuring them that the funding for those payments remains protected and again thanking all hon. Members who have spoken in this debate.