Correspondence: 15/08/2001 - from Diane Colton, Deputy Director of Insurance, Guernsey Financial Services Commission 15th August 2001 Letter
from Diane Colton,
Deputy Director of Insurance, Guernsey Financial Services Commission
THE EQUITABLE LIFE ASSURANCE
SOCIETY
Thank you for your e-mail addressed
to Mr Neville, with regard to the above. I have been asked to respond on Mr Neville's
behalf.
On review of your e-mail I would like to make the following comments.
- Since 1990, ELAS has
operated through a branch operation in Guernsey, managed by Bacon & Woodrow,
which has written business locally and internationally. ELAS Guernsey is not
a subsidiary as stated in your e-mail.
The regulatory arrangements are that being a branch operation of a UK insurer,
prudential supervision, including solvency, is the responsibility of the home
regulator, the Financial Services Authority (FSA) in the UK and market conduct
is supervised by the Commission. It is not an uncommon situation for branch
operations to operate in this way.
The Commission deals with any misselling complaints, however, the Commission
does not have the power to act as an ombudsman or arbitrator where complaints
arise but will ensure that they are dealt with at a senior level.
With respect to the ELAS situation, I confirm that the Commission has been
in continuing discussions with both ELAS and the FSA in the UK since the situation
arose
- It is the Commission's
understanding that there is no ringfencing and all of the International funds
are invested in the UK.
We are following the issues raised in the Warren Report and believe that ELAS
has asked Nicholas Warren QC to undertake a further review of the issues raised
in his report. We are currently awaiting the completion of that review.
I can confirm that to the best of the Commission's knowledge, no GARs were
issued by ELAS Guernsey.
- There is some uncertainty
surrounding the application of the UK Policyholders Protection Act. However,
the Commission understands that should Equitable become insolvent the UK Policyholders
Protection Act will cover local policyholders, although we have been unable
to get clarification from the Policyholders Protection Board, who will not
confirm the position until such time as they are actually required to compensate
policyholders.
The position appears to be different for international policyholders and the
policy documents for international Equitable branch policyholders have always
stated that the UK Policyholder Protection Act does not apply.
- You are incorrect in
assuming that there is no policyholder protection in Guernsey. All Guernsey
international life insurance companies are required to have policyholder protection
arrangements in place, whereby the companies are required to maintain a minimum
of 90% of assets, representing liabilities to policyholders, in trust for
the benefit of the policyholders. Guernsey insurance companies are also required
to maintain a minimum level of solvency, which is monitored on a regular basis.
As ELAS Guernsey is a branch of an UK operation, it falls outside these policyholder
arrangements. As with all branches, the Commission monitors the companies
in respect of market conduct; solvency being the responsibility of the FSA
in the UK.
A copy of your complaint
has been forwarded to Equitable for their comments and I will revert in due
course.
Please rest assured that the Commission is acting in the best interests of the
International policyholders.
Yours sincerely
Diane Colton
Deputy Director of Insurance
Guernsey Financial Services Commission
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