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
Media Stories: 10/01/2008 - Press Coverage of ELTA Settlement

Press Coverage of ELTA Settlement - 10/01/2008

Claimants settle with Equitable

Financial Times, Michael Peel 11th Jan, 2008

More than 400 policyholders in Equitable Life have settled their long-running claim for compensation, ending the last big legal action against the troubled insurer. Lawyers for the claimants said they were "absolutely delighted" with the confidential settlement, which will be paid from a pot of £128m set aside by Equitable to cover legal actions. The settlement in the case, which was due to be heard in the High Court this month, should boost efforts to engineer a sale or break-up of the company.

Paul Braithwaite, head of the Equitable Members' Action Group, said: "I am pleased it has been settled, but it is bittersweet. While 400 [policyholders] have been paid out, the other 56,000 will receive nothing."


Equitable pays annuity claimants

BBC website, 19th January, 2008

The Equitable was once one of the UK's biggest pension companies
More than 400 people holding with-profits annuities with the Equitable Life have won compensation for being mis-sold their policies.

The pension provider, which nearly went bust in 2000, has settled a High Court action brought in 2004 on behalf of 407 policy holders.

The terms of the settlement are confidential, but lawyers for the claimants said they were delighted.

The with-profits annuity business has since been moved to the Prudential.

The Equitable closed to new members in 2000, when its management lost a crucial High Court case that plunged the society's finances into crisis.

It meant they had to pay out much more money than they had set aside to a group of policyholders who held guaranteed annuity rate policies.

Since then, the Equitable has shrunk dramatically, with chunks of the company being sold off and past and present management being embroiled in a series of legal actions.

Robert Morfee, the partner at legal firm Clarke Willmott who represented the claimants, said: "The claims were exceptionally complex and involved a detailed analysis of a very intricate financial product and the regulatory process surrounding the advice which must precede the sale of such a product."

An Equitable spokesman said: "We are pleased to have removed another uncertainty from the business on behalf of our policyholders."

Annuities

The with-profits annuities were pension policies in which the policyholders' money continued to be invested in the Equitable's with-profits fund, even after retirement.

This fund was once largely invested in shares.

Since the near-collapse of the society, the fund has been invested mainly in much safer but much lower-yielding bonds, which has meant a big reduction in the pensions being paid out.

Originally, 879 policy holders were interested in suing the Equitable.

They claimed they had not been told the true risks of the policies when they were sold to them by Equitable staff between 1990 and 2000.

Some annuity holders dropped out, daunted by the potential cost of losing the legal claim, and some have died in the meantime.

A spokesman for the Equitable said there were no outstanding legal actions against the society, although the Parliamentary Ombudsman has still to publish her second report into the affair.


Equitable Life with-profits annuitants reach settlement

Solicitors Clarke Willmott’s press release:

Law firm Clarke Willmott secures settlement for more than 400 with-profits annuitants following long-running mis-selling claim.

Clarke Willmott has agreed a settlement of the action brought against Equitable Life by over 400 Equitable Life with-profits annuitants, the trial of which was due to start in the High Court on 28 January 2008. The details of the settlement are to remain confidential.

The group of 407 Equitable Life with-profits annuitants brought proceedings in the High Court in 2004. They based their claims on allegations that they had been mis-sold their annuities by Equitable Life’s salaried sales force between 1990 and 2000 during the period of management of the former Equitable Life Board.

The claimants’ complaints were, firstly, that the complexities of the product itself, and consequently its risks, were not explained to them. Secondly, they said that the additional risks posed by being dependent for their income on Equitable Life’s with-profits fund and the weakness of that fund were also not explained.

Equitable Life’s with-profits annuity is an investment linked annuity with the income provided being linked to the performance of the Equitable’s With-Profits Fund. Equitable has recently obtained the backing of the overwhelming majority of its with-profits annuitants to the transfer of these contracts to the Prudential PLC.

Robert Morfee, the partner at Clarke Willmott representing the claimants, said: “The claims were exceptionally complex and involved a detailed analysis of a very intricate financial product and the regulatory process surrounding the advice which must precede the sale of such a product.

“Furthermore, we had to reproduce the detailed examination of Equitable’s finances undertaken by Lord Penrose, whose report to the Treasury published in March 2004 first revealed that Equitable Life’s financial difficulties were due not solely, or even mainly, to their difficulties with guaranteed annuity rate policies, but were caused because the whole business model was flawed.”

The claimants are all elderly and, sadly, some have died during the course of the proceedings. At the date of settlement the average age of the claimants was 74.

Clarke Willmott devised a novel and highly effective approach to the claim. A special purpose company, ELTA Claims Limited, was established whose directors were drawn from the action group representing the annuitants (Equitable Life Trapped Annuitants or ELTA for short). The individual claimants irrevocably delegated authority to the company to conduct the claims on their behalf.

Clarke Willmott partner Paul Chapman, also representing the claimants, adds: “This has been a long and complex action. We are absolutely delighted with the result as are the individual claimants. They can now continue to enjoy their retirement without this burden hanging over them.”