Policyholders settle with Equitable LifePensions deal follows mis-selling legal claim
11 January 2008
More than 400 policyholders who had pensions with Equitable Life have reached a settlement with the mutual following a long-running mis-selling claim.
The settlement with the with-profits annuitants, details of which cannot be disclosed, comes just days before their case was due to begin in the High Court.
With-profits annuities are complex products under which the income provided by the annuity is linked to the performance of Equitable's with-profits fund.
A group of 407 with-profits annuitants, some of whom have since died, began proceedings in the High Court in 2004, claiming they had been mis-sold the products by Equitable's sales force between 1990 and 2000.
The group, whose average age is 74, claimed the complexity of the product, and consequently its risks, were not properly explained to them.
They also claimed that the additional risks posed by being dependent for their income on Equitable's with-profits fund and the weaknesses of that fund were not set out.
Paul Chapman, a partner at law firm Clarke Willmott which represented the action group Equitable Life Trapped Annuitants, said: '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.'
Robert Morfee, a partner at the firm who represented the claimants, said the claims were 'exceptionally complex' and involved a detailed analysis of a very intricate financial product and the regulations surrounding its sale.
Holders of with-profits annuities were hit particularly hard by the problems at Equitable, not only seeing their income fall as a result of the group's poor performance, but the society also reduced the value of their policies by 30% over two years.
Last year the group transferred its £1.7 billion with-profits annuity book to insurer Prudential, paving the way for the sale of the rest of society.
Commenting on the settlement, an Equitable spokesman said today: 'We are pleased to have removed another uncertainty from the business on behalf of our policyholders.'
Equitable Life was brought to its knees in 2000 when it lost a legal battle in the House of Lords over the rights of its policyholders, forcing it to close to new business and put itself up for sale.
Policyholders at the group are still waiting for a report by the Parliamentary Ombudsman to see if they are entitled to Government compensation over its role as regulator in handling the crisis.
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