A report has said Britain should apologise to more than a million policyholders in Equitable Life and offer them compensation.
The long-awaited report by Britain's parliamentary ombudsman comes almost a decade after the insurer's near-collapse.
Britain's oldest mutual insurer, with 1.5 million policyholders at its peak, almost collapsed in 2000 after being forced to honour unsustainable guarantees stretching back 30 years. It eventually closed to new business in one of Britain's most dramatic financial scandals.
Today's report by parliamentary ombudsman Ann Abraham, who has been probing the case for four years, will not guarantee a pay-out for all policyholders and further delays are expected. But it is expected to hearten those who have campaigned for years for government compensation.
'Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report,' the ombudsman said.
Vanni Treves, who became chairman of Equitable Life in 2001, said regulators' failure to tackle problems at the society meant the government should compensate policyholders who suffered losses as a result.
Ms Abraham, who leads independent inquiries into a range of public bodies, upheld a complaint blaming Equitable's troubles on regulatory and government failures.
She said bodies overseeing the insurer were 'passive, reactive and complacent', allowing one person to be both chief executive and appointed actuary for more than six years - neutralising the appointed actuary's 'whistle-blower' role.
They also failed to question or resolve issues around the affordability and sustainability of the bonuses to policyholders it was declaring and did nothing to solve the issue of information left out of Equitable's regulatory returns.
The report found that even after July 1998, when regulators were aware of growing problems, their actions were 'largely ineffective and often inappropriate'.
As a result, Ms Abraham's report recommended a compensation scheme to redress losses, and called on the British government to act swiftly, as tens of thousands of policyholders have already died since Equitable Life closed to new business. The report said a compensation scheme should be set up within six months of any decision by the British government or parliament, and said it should take no longer than two years to determine who is eligible for compensation and how much they should receive.
Equitable Life was estimated to have around 25,000 Irish policyholders.
