UK government should compensate Equitable Life victims

2.19.25pm BST (GMT +0100) Tue 19th Jun 2007

Euro MPs today overwhelmingly backed a report criticising the UK government's handling of the 2000 Equitable Life collapse which affected many of local MEP Graham Watson's constituents in the South West.

Commenting from the European Parliament in Strasbourg where MEPs this morning voted in favour the report, Lib Dem MEP Graham Watson said:

"The UK government's botched job in handling of the Equitable Life fiasco has been highlighted by this report, drafted by my Lib Dem colleague Diana Wallis MEP. MEPs have sent a strong message that the government should compensate victims, many of whom were my constituents in the South West, and the government needs to accept that its 'light touch' approach to regulating life insurance allowed the difficulties at Equitable Life to grow unchecked. Not only should the issue of compensation be addressed, but this must trigger improved law-making to safeguard consumers in these instances."

More than one million people - mainly in Britain but also in Germany and Ireland - lost money after Equitable guaranteed policyholders a minimum rate of return when they retired but later found it could not afford to meet its commitments. The Report voted on by MEPs concludes that "the UK government is under an obligation to assume responsibility" for losses suffered by policyholders.

Equitable Life, Britain's oldest insurer, found itself in severe financial difficulties in the 1990s after low interest rates and inflation undermined the company's ability to meet its promises on guaranteed annuity rate policies, which promise investors a minimum payment when they retire. The company put itself up for sale in July 2000 but failed to find a buyer and was forced to close to new business in December 2000.

A copy of the Equitable Life Report can be obtained via:

http://www.europarl.europa.eu/sides/getDoc.do?Type=REPORT&Reference=A6-2007-0203&language=EN