(STRASBOURG) - Britain should compensate Equitable Life policyholders who were hit by major losses at the British insurer, according to a European Parliament report on Monday.

More than one million people -- mainly in Britain but also in Germany and Ireland -- lost money after Equitable guaranteed policyholders a minimum rate of return when they retired but later found it could not afford to meet its commitments.

EU lawmakers are to vote on Tuesday on the parliament's non-binding report, which concludes that "the UK government is under an obligation to assume responsability" for losses suffered by policyholders.

The report, drafted by British Liberal Democrat Diana Wallis, is the fruit of a two-and-a-half-year investigation by a parliamentary committee that was launched in January 2006 after receiving two petitions from victims.

With its scope limited to the EU-related aspects of the case, the report found that British authorities failed to adequately implement European insurance law.

Equitable Life, Britain's oldest insurer, found itself in severe financial difficulties in the 1990s after low interest rates and inflation undermined the company's ability to meet its promises on guaranteed annuity rate policies, which promise investors a minimum payment when they retire.

Equitable tried to reduce the size of the final bonuses paid to its policyholders.

But a parliamentary ruling ordering the insurer to meet its obligations left the group with a liability of 1.5 billion pounds (2.22 billion euros, 2.97 billion dollars).

The company put itself up for sale in July 2000 but failed to find a buyer and was forced to close to new business in December 2000.

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