Equitable Life’s implus policyholders were failed by a combination of “manipulation and concealment” by its senior management and “complacent’ government regulation, says the long-awaited report into the mutual’s near collapse. However, the Treasury last night seized on Lord Penrose’s conclusion that Equitable was the “Author of its own misfortunes” to maintain its resistance to paying any compensation to victims of one of the worst scandals ever to hit the financial services industry.

Although the Scottish Judge’s report found an inadequate regulatory system had failed Equitable’s policyholders, he said its problems stemmed principally from over-dominant senior executives and a weak board. Ruth Kelly, financial secretary to the Treasury, said the regulatory failures identified by Lord Penrose were secondary to the mistakes of the former directors of the world’s oldest life assurer. “We cannot underwrite each and every company whose managements and boards make fundamental mistakes,” she told the House of Commons. One independent report had previously estimated the cost of compensating policyholders for their Equitable losses at £ 3.5 bn.