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

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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.

  1. 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

  2. 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.

  3. 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.

  4. 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