The UK Treasury has announced it would compensate victims of the Equitable Life scandal by a pay out of only £500m -- a tenth of the reparation the policyholders consider due to them.
The announcement was based on a report by Sir John Chadwick, who was commissioned by the previous government to study the issue of compensating victims of the near-collapse of the world's oldest mutual.
Treasury minister Mark Hoban said a final decision on how much would be paid out will be made in October, after the government's comprehensive spending review.
An independent commission will recommend how to allocate eventual payments by January 2011, and the aim was to begin compensating policyholders by the middle of the year, he added.
Policyholders expressed their anger at the Chadwick report, questioning the injustice of the plan. They are understood to have lost as much as £4.8bn.
Equitable Life's troubles began about a decade ago after it lost a legal battle over pension guarantees and repeatedly cut the value of policyholders' investments because it could not afford to pay those guarantees when stock markets fell.
