PAYOUTS UNDER the British government’s Equitable Life compensation scheme will begin by the end of June. However, Mairéad McGuinness, the Fine Gael MEP who chaired the European Parliament’s inquiry into the debacle, said not everyone who lost out would receive compensation.

“Policyholders who are eligible will be contacted directly,” Ms McGuinness said. She directed former policyholders to a website – equitablelifepaymentscheme.independent.gov.uk – on which the British government has outlined details of how the payment scheme will work.

More than one million British policyholders and more than 15,000 policyholders in other EU countries, including 6,500 in Ireland, incurred losses to their pensions, savings and investments.

The British treasury has set aside £1.5 billion to compensate existing and former policyholders after the parliamentary ombudsman identified 10 instances of maladministration by regulators and Whitehall officials in relation to Equitable in the period leading up to December 2001.

About 945,000 current and former policyholders will receive redress equal to 22.4 per cent of the relative amount they lost, compared with if they had invested their money with another life insurer. A further 37,000 with-profits annuitants, who are trapped at the society, will be compensated for their losses in full, with the money paid in regular instalments for the rest of their lives.

It is estimated that policyholders at Equitable Life have lost £4.3 billion compared with if they had held their money with another institution.

The treasury aims to pay the oldest policyholders first, with £500 million due to be paid out during the 2011-12 financial year, followed by £300 million in the second year of the scheme and £200 million in the third year. – (PA)