The Government was today put under pressure by MPs to compensate policyholders whose retirement savings were decimated in the Equitable Life scandal.

The Government has yet to comment on a report from Parliamentary Ombudsman Ann Abraham in July that identified 10 instances of maladministration and called on ministers to apologise for a “decade of regulatory failure”.

The life insurance company came close to collapse in 2000 after being ordered by the High Court to fulfil financial promises that it could not afford.

Ms Abraham said regulators failed to protect policyholders’ interests and urged the Government to compensate them.

Ministers today repeatedly sidestepped questions about Equitable Life from MPs who asked them to justify how the Government could spend billions on the banking bail-out but ignore the pleas of “prudent” households.

Conservative MP Graham Stuart (Beverley and Holderness) said many of his constituents had written to him about the issue.

During debate on supplementary estimates for 2008-9, Mr Stuart said: “Within the billions that are now being spent to sort out the financial system, surely it is right to rectify the injustice that has been visited on so many people who tried to be extremely prudent.

“They saw Equitable Life as a particularly safe place to put their money. These are people who had researched it, they had not been greedy by looking for the highest possible of all the terms, they had looked to place their money in somewhere sound and safe.

“They felt that they had had promises from the government - Conservative and Labour - and the regulations were there to protect them. And they have not been protected.”

Ministers were continuing to “ignore” their “righteous pleas for fairness”, he added.

Liberal Democrat MP David Heath (Somerton and Frome) said he had been expecting a statement on Equitable Life from ministers immediately after the summer recess following Ms Abraham’s report.

He said: “We still need that statement - we need it even more urgently because quite rightly people will be saying well how is it that this can be done for some and yet in our case, where we have a clear independent . . . review, that they have been let down by the regulatory authorities.

“Apparently the matter is not even to be mentioned, let alone dealt with.”

Summing up the debate, Financial Secretary Stephen Timms did not make any reference to Equitable Life.

Earlier, during Prime Minister’s question time, Commons Leader Harriet Harman also sidestepped questions about the life insurance company from Conservative MPs David Burrowes (Enfield Southgate) and Crispin Blunt (Reigate).

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