Equitable policyholders express anger over compensation report
Equitable Life policyholders expressed anger after a report suggested they should receive no more than £500m in compensation - a tenth of the amount they claim to have lost.
The Government said the exact sum that will be shared out between the 1.5m Equitable policyholders will be set out in this autumn's spending review.
But Financial Secretary to the Treasury Mark Hoban warned that the overall size of the compensation fund would be considered "in the light of what is affordable" as the Government focuses on reducing the deficit.
Policyholders will also have to wait a further year before they receive any money, as an independent commission set up to advise the Government on the best way to allocate payments will not report back until January.
The Government hopes to finally begin distributing compensation in the middle of next year - three years after the Parliamentary Ombudsman first called for people to be paid redress.
Former Appeal Court judge Sir John Chadwick, who is advising the Government on the level of compensation that should be paid to members of the society, has suggested the total sum should be between £400m and £500m.
This is despite the fact that he estimates policyholders have made relative losses of between £4bn and £4.8bn by investing their money with Equitable, rather than another life insurer.
It is also estimated that they have seen the value of their policies fall by up to £3.7bn as a result of the problems at Equitable.
But Sir John is recommending that policyholders receive only between 20% and 25% of this loss, reduced further once other factors are taken into account.