Victims of the near-collapse of insurers Equitable Life look set for a more generous payout than expected, it has emerged.

Chancellor George Osborne will use Wednesday’s Comprehensive Spending Review to announce compensation amounting to around 1.5bn to policyholders who lost pensions and savings, according to the Daily Mail.

Sign up to our daily newsletter

The i newsletter cut through the noise

The sum is more than three times the maximum 400m-500m payment recommended by former judge Sir John Chadwick, who was appointed by the last government to determine compensation.

More than one million policyholders lost out when Equitable came close to going bust in 2000. Many have died waiting for compensation and it is understood that their relatives will benefit from the payout.

Treasury sources declined to comment on the report.