Best Media Stories: 06/02/2006 - ELAS had to pay an £82k settlement ELAS had to pay an £82k settlementSimon Bain in The Herald 6 February, 2006http://www.theherald.co.uk/business/55648.html Equitable Life has paid £82,000 in compensation to a Lanarkshire professional who refused to be fobbed off by four years of delay in dealing with his mis-selling complaint, just weeks after making him a formal "final" offer of £500. The complainant, who had pension plans with Equitable worth more than £500,000, was persuaded by its salesman in 1999 to give up a pension with a guaranteed annuity rate (GAR) of 10% just months before the House of Lords' ruling in July 2000 which forced Equitable to honour the real value of its guarantees. His case was that Equitable knew of the potential cost of the guarantees should it lose in court but hid that from clients, seeking instead to minimise its liabilities, and maximise "new business", by switching high-worth clients into new plans. Equitable Life had 1.3 million members and a £26bn fund in 2000, but now has 260,000 and a fund of under £9bn, with former and surviving policyholders suffering cuts of at least 20% to their savings. When in 2001 Ray Walker (whose name has been changed at his request) was told that he would be excluded from the society's compromise offer of a 16% uplift for current GAR holders, worth some £70,000 to him, he decided to fight. He says: "I said to them all along – you gave me the advice that suited you, not me." Then in October 2002 the ombudsman said his "file had been closed", pending the outcome of a new review into Equitable's entire sale of income drawdown – known as the "managed pension review". By the end of 2004, Equitable had still not completed the review, and had for two years been using its own legal and actuarial advisers to fight the ombudsman over the definitions and terms of any compensation paid to any complainants. Walker wrote a fresh letter in December 2004, pointing out it was now more than three years since his first letter of complaint about GAR-related mis-selling. (In September 2005, Equitable reported that it had decided to be "pragmatic" and comply with the ombudsman's approach.) In March he received a letter from Equitable saying that the managed pension review was almost complete (after two-and-a-half years) and adding, by way of discouragement, that in "most of the cases" Equitable had been judged blameless. Some 15,000 cases were in the review. On April 11, Equitable embarked on its ill-fated £3.7bn court actions against its former auditors and directors. It at last became apparent, from supporting evidence released by the judge, that Equitable had been fully aware of all the implications of its original court case, and its possible effect on GAR policies, as early as September 1998. On April 15, the ombudsman wrote to Walker to say he was still unable to consider any complaints while Equitable was conducting its review – almost three years after his first letter saying the same thing. Finally on April 19, 2005, came the result. A six-page summary backed up the conclusion that no redress was due, because the income drawdown plan "met your needs and was at least as suitable as any other product within the society's range". However, still undaunted, Walker objected. The plan he was sold was not as suitable as being advised to stick with the 10% GAR annuity, he said, and the society had failed to disclose the implications of giving up the GAR policies. He was not going away, and he might even go to court. On May 31 last year, Equitable wrote again. It had investigated Walker's complaint that "you should have been informed about your entitlement and this would have influenced your decision". It calculated that the real loss to Walker through its own actions was £81,907, which it offered to pay as a lump sum. Walker says: "This has been four years of my life, when they really should have come out at the beginning and said 'we gave you the wrong advice'. They have had a team of people and told them 'try and stall as long as you can'. In my case they haven't won, but in how many cases have people just gone away?" Equitable Life's spokesman Alistair Dunbar said time had been needed because the issues were complex. "We looked at it again and decided on balance we were convinced by his argument." |