Equitable Life policyholders take High Court action

by Gill Montia

Story link: Equitable Life policyholders take High Court action

Equitable Life policyholders are demanding a judicial review of the compensation offer made by the Government in January.

In 2001, millions of investors in the UK’s oldest mutual insurance company lost up to 50% of the value of their pension funds when Equitable Life came close to collapse.

From the 1950s the company had sold policies that guaranteed a minimum annuity rate to investors but the strategy left it unable to honour its promises.

In July of last year, Parliamentary Ombudsman Ann Abraham published a report on the demise of Equitable, which accused regulators of comprehensive failure and the Government of maladministration.

Having found that regulatory bodies had functioned in a passive, reactive and complacent manner and that the FSA had supplied policyholders with information that was inaccurate and misleading, Ms Abraham recommended the establishment of a scheme that would consider individual claims for compensation.

In January, the Government announced that Equitable Life policyholders who qualify as having been “disproportionately affected” by the near collapse of the insurer, would receive compensation.

Commenting on the response, the general secretary of the Equitable Members Action Group (EMAG), Paul Braithwaite, said: “The government’s continued intransigence has forced us to take legal action. The proposed hardship scheme is totally inadequate, will take years to implement and looks like leaving 90% of victims out in the cold.”

The group is therefore demanding a judicial review of the Government’s offer on the grounds that the Treasury has not given “cogent reasons” for refusing to accept some of the Ombudsman’s findings.

EMAG is pushing for an early hearing date, claiming that around 15 Equitable Life policyholders who could be considered for compensation die each day.