Former appeal court judge Sir John Chadwick has been asked to advise the Government "as swiftly as possible" on the extent of relative losses by Equitable Life policyholders, the payments that might be due because of any maladministration, and which groups of policyholders had suffered most.

Chief Secretary to the Treasury Yvette Cooper apologised to those who had lost money after the society's near collapse.

"We agree there has been maladministration in several areas and that government action is merited," she said.

But she added that any eventual payments would still have to "take account of the position of the public finances".

The Government’s action comes in belated response to a critical report last year by the Parliamentary Ombudsman, Ann Abraham, who called on the Government to establish a compensation scheme. Her report highlighted 10 different instances of mistakes by regulatory bodies charged with supervising Equitable Life between 1990 and 2001.
 
Ms Cooper did not explicitly accept all the failings listed by the Ombudsman. But she did admit that the society’s finances should have been scrutinised more thoroughly by the authorities between 1990 and 2000, and she said misleading statements had been made by the Financial Services Authority (FSA) after 2001 which "may have caused injustice".
 
Ms Cooper pointed out that the official report by Lord Penrose in 2004 had singled out Equitable Life’s management as mainly responsible for its financial problems.

It is thought that more than a million of the 1.5 million people who had Equitable polices in 2001 have seen the value of their investments slashed, in some cases by as much as 50%

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