The Equitable Late Joiners Action Group has accused Equitable Life of offering policyholders far less than their policies are worth.
ELJAG has apparently recommended that the 16,000 policyholders that took out Equitable Life with profits policies after September 1998 reject the offer. The reason being that the offering is less than one fifth of the actual policy values. Equitable Life has made these offers on the basis that any right to compensation is waived. ELJAG believe that Equitable is trying to avoid paying out more if any enquiry leaves them liable for policyholder losses.
A spokesman for Equitable Life said that the formula for working out payments had been based on the termination or cash in value of policies and had been watched by the industry regulator, the Financial Services Authority.
Our View
If you are one of the policyholders that took out your Equitable policy after September 1998, you may be offered a payment from Equitable. If you are unsure of what to do, take advice.
If ELJAG is correct and the offers are only one fifth of policy values you need to be sure of your options before accepting it. Another issue to bear in mind is that Lord Penrose's enquiry into Equitable Life has been due for some time but is now expected in the autumn. If this enquiry recommends Equitable should be responsible for policyholder losses, then the offer of one fifth of the policy value may not be enough.
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