Victims of Equitable Life's near collapse have been told by the company's CEO they should accept a government payout of half that recommended by officials.
Chris Wiscarson said the economic climate meant a payout of £2bn would be a "great start".
Parliamentary Ombudsman Ann Abraham recently said previous proposals of payouts of between £400m and £500m were far too low and that a sum of between £4bn-£4.8bn would be more acceptable.
However, speaking to Sky News, Wiscarson indicated a smaller payout should be taken by policyholders.
"If we take the number of £4bn-£4.8bn and go to the lower end of that, £4bn, what can the Government really afford?
"I have said that they are announcing 75% - or at least 25% reductions - in other Government departments.
"So that must be a good starting point. However, if you look at the £4bn, what's the right thing that Government must do? I think if you start off going: £2bn, minimum £2bn for policyholders - that would be a great start."
The Equitable Life (Payments) Bill is currently going through parliament and gets its second reading in the House of Commons today.
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