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: 21/03/2002 - Statement by Equitable Life on Procedure for GAR-Related Claims

21 March 2002 - Statement by Equitable Life on Procedure for GAR-Related Claims

Following the successful completion of the Society's compromise scheme, the Board of the Equitable Life is moving to resolve other outstanding issues. These include potential GAR-related claims for alleged misselling from former non-GAR policyholders whose policies matured or were surrendered before the compromise became effective, and who are therefore not bound by the scheme.The Society has always made clear to such policyholders that it does not accept there is any generic liability. In order for claims to be successful policyholders would have to show both that their policy was missold to them and that they have suffered loss as a direct result of the GAR issue rather than as a result of the fall in the stock market.

The Society expects to meet any cost of compensation from the remaining balance of the non-GAR misselling provision included in the interim financial statement.At the same time, the Society wishes to ensure that former policyholders who may have valid claims are treated fairly and efficiently. In the interests of continuing policyholders the Society is creating a clear, quick and efficient process that minimises uncertainty and administrative cost. Following discussions with the Financial Services Authority (FSA) and between the FSA and the Financial Ombudsman Service (FOS), the FSA has requested and the Society has agreed the following:
To commission an independent review by the consulting actuaries B&W Deloitte to determine whether particular categories of former policyholders may have suffered loss resulting from the GAR problem in the event that policies were missold to them. The terms of reference for this review, which were discussed with and agreed by the regulator, are published on the Society's website. These take into account the various legal Counsel's opinions provided to the Society and to the FSA.

That the review will compare amongst other things the performance of Equitable products with the average performance of other comparable products, taking into account the product characteristics. On the basis of this comparison and having regard to the date of purchase, the payment profile and the date of maturity or surrender, the study will seek to identify whether - as a result of the transfer of value from non-GAR policies to GAR policies arising from the House of Lords ruling - there are former non-GAR policyholders who might have been better off if they had purchased policies with another provider, and what, if any, is the scale of the loss. The results of this review will be made public.

Should the review indicate that some categories may contain former non-GAR policies where a compensatable loss may have resulted, the Society will put in place a process that addresses and appropriately compensates such former non-GAR policyholders.

Announcing the move, ELAS Chief Executive Charles Thomson said:
'Any compensation paid to former policyholders can only come from the funds of continuing policyholders. Given that, our process must be both fair to our continuing policyholders and give justice to those who have left the Society.While there may be former policyholders with justifiable GAR-related misselling claims that warrant compensation, we believe that the number and scale of successful claims should not be extensive. A large number of criteria have to be met before any claim is valid.The process will take into account all relevant factors including flexibility of the policies, and the fact that falls in policy value resulting from decline in the stock market are not a basis for compensation.This process is a cost-effective alternative to the Courts which can be expensive, time consuming and would potentially put at risk the resources of both former policyholder claimants and the Society.' "