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Daily Insurance Industry News
Saturday 20th of January 2018
July 9, 2008

Equitable Life report could give policyholders right to sue

by Gill Montia

Story link: Equitable Life report could give policyholders right to sue

A long awaited report on the failure of Equitable Life is due to be published next week and could pave the way for over one million policyholders to claim compensation from the Government.

The life assurer collapsed in 2000 when it could no longer pay guaranteed bonuses to policyholders.

The report’s findings are based on a four-year enquiry by Parliamentary Ombudsman, Ann Abraham, and it is understood that the Treasury, Financial Services Authority and the Government Actuary’s Department have been named as failing to adequately regulate the company.

Many of the policyholders affected by the collapse had their pension savings with Equitable Life and the cost to the Government of claims by those who lost out could reach £4 billion.

An initial report into Equitable’s troubles found that the company had brought about its own downfall by making over-generous payments to policyholders.

However, those dissatisfied the Treasury commissioned Penrose Report took the matter to the European Parliament, which ruled that the UK government held responsibility because it did not ensure that EU legislation on insurance had been properly implemented.

As a result, the Parliamentary Ombudsman began her enquiry in July 2004.

Meanwhile Equitable Life has been engaged in selling off parts of the business and in legal actions against former directors and its auditors.

In 2007, the company sold £1.8 billion of its with-profits business to Prudential.

 

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