Equitable Life deal 'a stitch-up'

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Treasury Chief Secretary Yvette Cooper issued an apology for the state's role in the collapse and said ex gratia payments would be made to those "disproportionately affected" after regulators failed to prevent the firm's demise.

But, to the anger of groups representing around a million individuals who lost out, she rejected calls from a watchdog and senior MPs to set up an independent tribunal to calculate compensation.

Instead, a former Appeal Court judge has been appointed to decide who should benefit and to what extent the taxpayer should be required to subsidise the payments.

Paul Braithwaite, of the Equitable Members Action Group (EMAG), welcomed the apology but said members should feel "grossly aggrieved" that their eight-year fight looked set to drag on.

"EMAG is depressed that this is more of the same stitch-up," he said.

"While we welcome the apology, we deplore that the Parliamentary Ombudsman's proposed independent tribunal to dispense compensation for injustice just flew out of the window and the methodology prescribed this afternoon was for the villains of the piece, the Treasury, to work behind closed doors with a retired judge in another open-ended process that is predicated on dispensing ex-gratia charitable payments to those who are most disproportionately affected, whatever than means.

"This is a very long way from the investors' reasonable expectations and I think they will have a right to feel grossly aggrieved with the Government."

Delivering the Government's long-delayed response to an investigation by Parliamentary Ombudsman Ann Abraham - Ms Cooper said the Government accepted her finding that maladministration by public bodies had been partly responsible for the collapse.

"I wish to apologise to policyholders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place," she told MPs in a Commons statement. She went on: "We intend now to set up a scheme to make ex-gratia payments to those who have been disproportionately affected."