As reported in the Mail on Sunday;
“The Mail on Sunday has long known that the £1.5 billion payout to just over a million Equitable Life policyholders hit by the near-collapse of the insurer 13 years ago is being badly handled.
Rarely a week goes by without correspondence from at least half a dozen Equitable customers. All of them are elderly, many frail, and all complain they have either not received compensation, or if they have it is less than expected.
Most of those who have challenged National Savings & Investments, which is handling the payments for the Treasury, complain of a robotic response to correspondence and complaints, with specific queries ignored.
The financial services industry is renowned for substandard customer service, so we should not expect any better from NS&I, but this is an appalling way to treat elderly people.
The National Audit Office last week confirmed the scale of this mess when it said that more than 660,000 payments had yet to be made (the intention was to make all payments by March next year) and that only a paltry 0.02 per cent of members of group pension schemes (where Equitable was the investment manager) had received compensation. More worryingly, it predicts between 17 and 20 per cent of policyholders eligible for compensation will never get their money because NS&I won’t be able to track them down (presumably because they have moved).
Understandably, the report’s findings provoked a furious response from policyholder pressure groups and some MPs who have campaigned for justice for Equitable Life policyholders.
Paul Weir of the Equitable Members’ Action Group said it was inexcusable that so many savers had died before a penny of compensation was forthcoming while senior Tory MP David Davis implored the Treasury to do more – primarily kick NS&I up the backside – to ensure Equitable savers are ‘treated as fairly as possible, after what has been a miserable experience for them’.
Margaret Hodge, chairwoman of the Commons Public Accounts Committee, said it was ‘disgraceful’ so many savers would not receive compensation because of NS&I’s failure to find them. ‘These conscientious savers should not lose out,’ she said.
I do now hope the NAO report spurs the Treasury and NS&I into overdrive. It is bad enough that policyholders were kept waiting more than a decade before Government acknowledged they had a right to compensation.
But to dangle compensation before their eyes and not hand it over is truly shameful.
Banking – undermined by repeated mis-selling scandals and woeful service – is in dire need of a major injection of competition to give customers a better deal.
So it was disappointing to learn last week that the Co-operative Bank had pulled out of an agreement to acquire more than 600 branches from Lloyds – a deal that would have made the mutual a true challenger to the much-maligned big four of Barclays, HSBC, Lloyds and RBS.
Richard Lloyd, executive director of consumer group Which?, said: ‘The Co-op’s decision is a setback to the Government’s efforts to tackle the unhealthy dominance of our biggest banks.
‘The deal would have given more choice to consumers who are sick and tired of shoddy service and unfair fees and put more pressure on the big banks to work for customers, not bankers.’ He is dead right. The Co-op’s decision to walk away after one and a half years of hard negotiating does not reflect well on it – and raises questions about its financial strength and commitment to current account banking. But of more concern is how the iron grip of the big banks is going to be broken, now that the Co-op has stepped back into the Manchester shadows to lick its wounds.
New switching rules coming in this September should make it easier for unhappy customers to move current accounts to new challengers such as Metro Bank, Nationwide Building Society and Swedish-owned Handelsbanken. But I can’t imagine they will have anything but a marginal impact.
Maybe it is time for more radical alternatives to be considered, such as a network of regional banks.
This is an idea being put forward by Guy Opperman, Conservative MP for Hexham, who believes these would increase competition, widen choice and provide much-needed credit for local companies.
He is chairing a conference on regional banks in Gateshead in early June organised by the Institute for Public Policy Research. It might produce nothing more than hot air, but it could act as a catalyst for the greater competition the current account market so badly needs.”