The Equitable Life clock is now ticking on the proposed compromise agreement reached between the policyholder action group and Equitable Life. Members must vote sooner rather than later with a majority decision required in the next few days. The urgency is based upon the fact that a compromise agreement must be reached by 1 March 2002 for Halifax to pay an extra £250m for the purchase of Equitable Life's assets, which formed part of the original agreement.
Timetable: December 2001 - Details of the agreement were sent out to members, 9 January 2002 - Deadline for postal votes, 11 January 2002 - Voting deadline, End of January 2002 - Results of vote expected, February 2002 - Approval sought from the High Court if vote is positive, 1 March 2002 - Additional £250m due from Halifax if all is successful.
Previous Notes:On the 16th July 2001 Equitable Life announced cuts in policy values to the tune of 16% for pension policies and 14% for life policies. The penalty for transferring away or cashing in policies was reduced from 15% (set in March 2001) to 7.5%. These exit penalties started off at 10% in December 2000 but the July changes were backdated to 31st December 2000.
The board of Equitable Life and policyholder action group representatives met in the summer to discuss a compromise deal in respect of Guaranteed Annuity Rates policyholders. The deal would be for GAR holders to give up their guarantees and receive a one off payout from Equitable Life to uplift the value of their policies. This compromise, thought to be an uplift of possibly 20% must be agreed by 1st March 2002 if Equitable are to receive a £250m cash payment from Halifax. Another meeting has been set for next week and it is anticipated that the deal should be published to policyholders by the middle of September. However, the feelings of the action groups may not totally be the view of policyholders and we will have to wait to see what policyholder response is to the compromise. In order for the compromise to go through it will need a majority vote from policyholders.
More immediate problems are on the horizon for policyholders who have decided to cut their losses and run. Not surprisingly, Equitable are suffering administration backlogs and transfers of pensions to other providers are possibly missing out. This is because other providers who quote to receive the pension transfer from Equitable do so generally for a period of two weeks at a certain annuity rate. If the transfer is not completed within the two weeks a new quote will have to be done and annuity rates offered at that time may be lower if market conditions have changed. Currently Equitable may be taking up to four weeks to process transfers and this could lead to policyholders seeking compensation for delays. However - The Treasury has announced that there will be a public inquiry into the Equitable Life saga which should be completed by summer 2002. Although the Financial Services Authority (the financial services industry regulator) has almost completed their review of the situation, it only covers the period from 1st January 1999 to the date in December 2000 when Equitable closed its doors to new business. The Treasury intends to carry out a wider review and will go back as far as is necessary to help reassure the public.
Help And Advice - If you are an Equitable Life policyholder and would like advice or guidance of the Equitable Life issues, please contact us.