Fabian Hamilton

I think that is above my pay grade. The fact is that we all need to be vigilant to ensure that the regulators are properly regulated. I imagine that it is up to us as parliamentarians to make sure that those who are charged with regulating—or with regulating the regulators—do their job properly and prevent this kind of injustice from ever happening again. But the fact is that it has happened, and many people have suffered. Equitable Life is one of the biggest scandals in the history of UK financial services, with more than 1 million people losing a significant proportion of their hard-earned retirement savings. Those people had done what successive Governments encouraged them to do: they worked hard, saved and made provision for their later years, rather than relying entirely upon the state. They trusted that the regulatory system established by Parliament—I hope this addresses the hon. Gentleman’s point—would provide appropriate oversight and protect the public from serious failures in the financial services sector. However, they were let down by Government Departments and regulators that failed to do their job to an acceptable standard. Following a four-year inquiry, the parliamentary ombudsman found that policyholders’ losses were directly attributable to a decade of serious and serial regulatory maladministration. The ombudsman made 10 determinations of maladministration and five of injustice, and concluded that the serial maladministration had resulted in the true financial position of Equitable Life being concealed and misrepresented. The findings were exceptionally serious. The ombudsman stated that “the prudential regulation of the Society…failed comprehensively” and catastrophically, but that, crucially, it was not a failure of the regulatory system itself. It was “a failure properly to implement in the particular case of the Society the system of regulation that Parliament had enacted.” The ombudsman also made it clear that no other party could be said to be at fault, because the regulators, acting with the advice and assistance of the Government Actuary’s Department, had “acted with maladministration”. Those were not merely the complaints of disappointed investors; they were the formal findings by our independent parliamentary watchdog after a forensic and lengthy investigation. The ombudsman recommended that “the Government should establish and fund a compensation scheme…to put those people who have suffered a relative loss back into the position that they would have been in had maladministration not occurred.” In 2010, the Government accepted the ombudsman’s findings in full. They acknowledged losses of £4.1 billion, yet only £1.5 billion was actually allocated to compensation. That is the fundamental unfairness that the victims of this scandal want to put right. Of the policyholders affected—forgive me for all the statistics, but they are relevant—37,000 with-profits annuitants are receiving full compensation through annual payments for life: so far, so good. However, approximately 895,000 other policyholders received a one-off payment amounting to just 22.4% of their acknowledged losses, barely one fifth of the compensation needed to address the losses that the Government accepted had resulted from maladministration. According to figures supplied by EMAG, those policyholders are still owed £2.6 billion before any consideration of interest. I ask the Minister to reflect on what that means in human terms. For many people, retirement savings represent decades of sacrifice. They are the savings that are put aside instead of taking holidays, improving homes or spending more freely on themselves and their children during their working life.