Equitable holders face new delay in cash fight

Campaigners who have been pursuing the issue for the past eight years admit that more battles - probably in court - are likely, despite the call from the Parliamentary Ombudsman for a speedy resolution to the issue.

The final report into the UK insurance industry's worst failure, published yesterday, advocated that ministers set up a fund for the million-plus customers who saw their pensions devastated.

Ann Abraham, the Ombudsman, said the DTI, the Government's Actuary Department and the Financial Services Authority failed to use the powers available to them to protect Equitable's customers. It was "a decade of regulatory failure" that should lead to compensation payments, she argued.

The Equitable Members Action Group claims £4.65 billion was lost by 1.5 million policyholders. But with Government finances in disarray, it seems unlikely that anything like this will be paid.

The group, led by Paul Braithwaite, pledged to continue the fight by making the Equitable scandal an election issue. But he concedes they may have to wait for a new government before anything is paid out. Pensioners' relatives are already gearing up to pursue claims if the policyholder dies before a deal is cut.

Braithwaite said: "Thousands of pensioners have died waiting for justice. It's time the Government stopped hiding behind one inquiry after another and did the moral thing."

The campaigners saywatchdogs were aware in the early 1990s that Equitable was effectively insolvent, yet they allowed it to take in another £20 billion in pension contributions. Equitable chairman Vanni Treves said: "This milestone report has laid bare the unmitigated disaster that was the regulation in the 1990s and beyond. The Government has known of the findingsfor many months and we call on the Government to accept the report's recommendations for a compensation scheme without further delay."

The Treasury said it would make a response by the autumn. The Equitable scandal surfaced in 1994 when the insurer said it would cut the size of the final bonus paid to 90,000 customers. Those customers said they were sold guaranteed annuities that promised a minimum level of retirement income, and the firm had reneged on its deal.