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

Documents: 20/09/2001 - EQUITABLE LIFE's COMPROMISE PROPOSAL: EMAG's Initial Reaction

EMAG (Equitable Members' Action Group) shares the Equitable board's belief that a fair and just compromise is necessary to stabilise the Society for the more than one million policyholders who have suffered a horrendous series of body-blows to their pensions and, understandably, continue to be very anxious.

EMAG is independent and does not represent any one group of policyholders. Rather, we seek information and influence on behalf of ALL classes, such that individuals can make their own informed choices.

For members to agree to swallow yet another, frankly, very bitter pill they must be told the true circumstances of the Society. Normally with a Section 425, a comprehensive Statement of Affairs is provided detailing the current financial position.

Here we have 86 difficult-to-understand pages written by very expensive lawyers containing little or nothing about our Society's finances. How are we to know whether, for example, the board has retained a billion pounds as a new cash-cushion smoothing fund?

Numbers are a very sensitive subject for Equitable. Over and over EMAG has pressed for the data from the Financial Review that led to the Society's own "Black Monday" July 16th devaluation but without success. Every attempt, even through the Appointed Actuary and the FSA has, thus far failed to secure for the owners of the Society the rudimentary information needed by policyholders and their IFAs to make reasoned decisions.

As recently as Tuesday the board admitted that data tracksing departures is simply not collected. How can this be? Today we are told that £600m left the fund between July 16th and August 31st but we do not know whether this figure exclude contratual or corporate scheme departures. It certainly conceals the known tens of thousands of policyholders queuing to get out.

The compromise proposal incorporates a new opinion by the eminent QC, Nicholas Warren who was first commissioned by the Society in January at the instigation of EMAG. He has proved to be the policyholders' bright and shining star. His report vindicates the deep-seated conviction held by most non-GARs that they were mis-sold.

In April, May and June, Action Group leaders had three lengthy meetings with Equitable's management and consultant team, but there is little in this proposal to demonstrate that what we said was heard.

Fortunately this is, theoretically, a consultative proposal. We would like to see the offer "beefed up", particularly for the savagely hit non-GARs who joined the with-profits fund post 1998 and for the annuitants, who are locked in. We will also be asking that consideration be given to "Unitising" the with-profits fund (see website: www.emag.org.uk) so that members could if they wished switch to a choice of transparent unit linked funds of varying risk.

But most pressingly we will be asking the board as a matter of urgency to prepare and communicate to the members a comprehensive, up-to-date financial report including the fund's current value and recent performance, plus details of how much money and how many policyholders have left since closure and between July 16th and September 30th. To wait until the voting pack in mid-November, only then to receive interim accounts to June 30th (pre devaluation), is totally unacceptable.

We will be encouraging our members to speak up at the 16 public roadshows meetings to try to improve what's on offer and to demand more information.

Paul Braithwaite
Chairman EMAG Equitable Members' Action Group: