The European Parliament last month supported a report, written by Liberal Democrat Diana Wallis, which urges the British Government to assist policyholders who suffered severe losses when Equitable Life got into financial difficulties in 2000.

The report found that the Government had failed to comply with EU insurance law in not ensuring that Equitable Life had sufficient funds to meet its obligations to policyholders. It concluded that, as a consequence, the Government contributed to the losses policyholders suffered and that it should therefore assume responsibility for establishing a compensation scheme for policyholders. Whilst the report is not binding, it comes ahead of a report into the Equitable Life problems by Ann Abraham, the UK Parliamentary Ombudsman to be issued later this year, which could well reach similar conclusions.