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Equitable Life savers 'risk losing out on compensation'

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Media captionJeff Worsley from the Equitable Members Action Group: "I think it's rather sad and rather wrong"

A report by MPs says 200,000 pension savers who lost money in the Equitable Life scandal may miss out because of lack of publicity for a compensation scheme.

The Commons Public Accounts Committee says one in five policyholders might not be traced before what it calls an "arbitrary" deadline of March 2014.

The insurance company came close to collapse in 2000.

The failure created one of the UK's biggest financial scandals.

The Treasury set up a redress scheme aimed at compensating those who lost money on their pension investments.

But the lack of publicity over the cut-off time for claims has left a "real risk" that some might miss out, the MPs said.

Image caption The March 2014 deadline could leave up to one in five policyholders without compensation

The Commons Public Accounts Committee (PAC) said that the Treasury estimated that up to 236,000 people might not receive any money.

An arbitrary choice of March 2014 for the closure of the compensation scheme "increased the risk" of these untraced savers losing out again.

"With less than a year to go before the scheme closes, the Treasury still has 664,200 payments worth £370m left to make. Unless the Treasury and its administrator, National Savings and Investments (NS&I), get their act together there is a real risk that large numbers of policyholders will miss out," said Margaret Hodge, who chairs the committee.

The committee called on the Treasury to publicise the deadline now, rather than waiting until September, which it is planning to do.

'Unacceptable delays'

After years of official inquiries into the scandal, the government agreed to a compensation system in 2010, with the first payments being made by June 2011.

The National Audit Office (NAO) report said that not enough preparation work done by the Treasury and NS&I - a view echoed by the Public Accounts Committee.

Only £168m was paid out by March 2012, rather than the expected £500m.

Meanwhile, the NAO said that only 35% of total payments had been made, but 72% of the £57m administration budget had been spent.

By the end of March this year, some £577m had been paid out to 407,000 policyholders

However, the NAO and the committee said that the government had failed to take on board the lessons of other compensation schemes when the system of redress was set up.

Repetition

The committee said that it had heard evidence of policyholders being sent multiple letters requesting the same information, and individual complaints and queries receiving generic responses.

"Hundreds of thousands of conscientious savers are losing out because of the Treasury's failure to get a grip on the payment scheme," Mrs Hodge said.

"It focused on an arbitrary target for making the first payments at the expense of proper planning and this has led to unacceptable delays and spiralling costs."

She said she was "stunned" to learn that the Treasury destroyed details and addresses of 353,000 policyholders provided by the Equitable Members Action Group in 2011 on data protection grounds.

A Treasury source said: "While Labour did absolutely nothing about the Equitable Life scandal for a decade, this government has allocated up to £1.5bn to help people who suffered a great injustice, with tens of thousands of policyholders receiving around £700m in payments since 2011. We make no apology for starting to get payments out the door a year after the Coalition was formed.

"We do not agree that the government has failed to get a grip on the planning or delivery of this important work. We continue to monitor the progress of the Equitable Life Payment Scheme very closely and are working hard to maximise the numbers of people who will eventually receive payments.

"Instead of scaremongering the Labour chairman of this committee should explain why her party shamefully did absolutely nothing about this scandal for a decade."

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