EMAG

The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

Search
Correspondence: 09/07/2003 - Getting an explanation for surrender and maturity values: a minor victory over The Equitable and a demonstration of the lack of helpfulness of the FSA, Alex Henney, EMAG

9 July '03 - Getting an explanation for surrender and maturity values: a minor victory over The Equitable and a demonstration of the lack of helpfulness of the FSA, Alex Henney, EMAG

Background

Last November I decided to ask The Equitable for surrender and maturity values for the with-profitss policies held by my wife and myself. When I was provided with the numbers, I then asked for an explanation of how they were derived from the values that had been provided (for all policyholders). I was told:-

"We do not provide details of how we arrive at surrender values. It is not a serviced we offer".

I regarded this as outrageous; it is analogous to a bank providing an opening balance and a closing balance, with no transactions (and charges) in between. On 18 November I wrote to Mr. John Tiner, Managing Director of the FSA, asking "would you please instruct the Society to provide myself and other members with the basis of their policy values. I hope you will agree that it is long overdue that the FSA does something to try to resolve a modicum of trust between the Society and its battered members, rather than just publish fine words. Please would you help us to get adequate information from Equitable". (This request was an elaboration of a section of an earlier letter I had written to him of 12 November titled "A complaint regarding the lack of information provided by the Equitable to its members", see website, to which he replied in an entirely unhelpful manner on 10 January, (see website). His reply to this particular request was as follows:-

"In your letter of 18 November, you set out details of the policies that you and your wife have with Equitable Life. You will understand that it is not for me to provide an explanation of the figures. However, there may be some general points I can make. First, I am not sure what the relevance might be of the ratios you have highlighted. For example, the guaranteed value is not a proportion of the indicative policy value. The values are derived independently, one by the addition of guarantees and the other by the addition of non-guaranteed bonus.

At a general level, I should also say that it is difficult to draw direct comparisons between different policies. The values you refer to will be affected by a number of things, including the type of policy, the amount of premiums paid and the precise date of every payment, the impact of any guarantees that might be provided for under the terms of the contract and any charges that may be deducted".

You will note that Tiner did not respond to my letter - I was not asking him to explain a set of figures, which he was not in an informed position to comment upon. Rather I was requesting him to instruct the Society to provide me and other members with the requisite information.

I went through the routine of complaining to The Equitable (which not surprisingly achieved nothing), which is the necessary precursor to complaining to the Financial Ombudsman Service (South Quay Plaza, 183 Marsh Wall, London E14 9SR, T: 020 7964 1000, www.financial-ombudsman.org.uk). The FOS came up trumps, and I received the attached letter from The Equitable.

On 19 June I wrote to Tiner as follows:-

"I am glad to say that the Financial Ombudsman Service did not take such a casual attitude as you did to other people's money, and I obtained from The Equitable an explanation of the calculations, which I attach. I understand from the writer of the letter that although the computer undertakes the calculations, she had been advised that it would be expensive to programme it to print out the intermediate steps. She calculated the figures by hand, which took about 1 hours.

One of our Committee members commented that EMAG has been told of cases in which serious errors were made and initially denied by the Equitable, which would have been impossible if it had to explain the calculations. May I repeat on behalf of other policyholders my request that you now instruct Equitable to provide the calculations when requested. I hope you are not going to hide again behind your previously stated opinion that the Equitable is no worse than the other life assurers in this incompetent and secretive industry, and therefore that absolves the FSA from doing anything with regard to The Equitable. I draw your attention to S4(2)(b) and S5(2)(c) of the FSMA which lay upon the FSA "so far as reasonably possible", a duty of ensuring consumers have "appropriate" and "accurate" information. Knowing the basis of what a policyholder is due falls clearly within the requirements for information.

Your response to my various requests for the FSA to instruct the Equitable to provide information has been lamentable, consistent with the FSA's regulatory failures as documented in my submission to Penrose "A case study in serial regulatory failure by the government and its agent, the Financial Services Authority", and of the FSA's advice to non-GAR members to sign up to the compromise. I would be grateful if you would accept the invitation of my letter of 6 May 2003 to advise us of exactly what benefit the FSA has been to the majority of the members of the Equitable who have over the years paid for the costs of regulation."

I await his response with interest.

ALEX HENNEY