Equitable Life with-profits annuitants reach settlement

Last Updated: Thursday, January 10, 2008 05:25 PM

PRESS RELEASE 10 January 2008


Law firm Clarke Willmott secures settlement for more than 400 with-profits annuitants following long-running mis-selling claim.


Clarke Willmott has agreed a settlement of the action brought against Equitable Life by over 400 Equitable Life with-profits annuitants, the trial of which was due to start in the High Court on 28 January 2008.  The details of the settlement are to remain confidential.


The group of 407 Equitable Life with-profits annuitants brought proceedings in the High Court in 2004.  They based their claims on allegations that they had been mis-sold their annuities by Equitable Life’s salaried sales force between 1990 and 2000 during the period of management of the former Equitable Life Board.


The claimants’ complaints were, firstly, that the complexities of the product itself, and consequently its risks, were not explained to them.  Secondly, they said that the additional risks posed by being dependent for their income on Equitable Life’s with-profits fund and the weakness of that fund were also not explained.


Equitable Life’s with-profits annuity is an investment linked annuity with the income provided being linked to the performance of the Equitable’s With-Profits Fund.  Equitable has recently obtained the backing of the overwhelming majority of its with-profits annuitants to the transfer of these contracts to the Prudential PLC.


Robert Morfee, the partner at Clarke Willmott representing the claimants, said: “The claims were exceptionally complex and involved a detailed analysis of a very intricate financial product and the regulatory process surrounding the advice which must precede the sale of such a product. 


“Furthermore, we had to reproduce the detailed examination of Equitable’s finances undertaken by Lord Penrose, whose report to the Treasury published in March 2004 first revealed that Equitable Life’s financial difficulties were due not solely, or even mainly, to their difficulties with guaranteed annuity rate policies, but were caused because the whole business model was flawed.”


The claimants are all elderly and, sadly, some have died during the course of the proceedings.  At the date of settlement the average age of the claimants was 74. 


Clarke Willmott devised a novel and highly effective approach to the claim.  A special purpose company, ELTA Claims Limited, was established whose directors were drawn from the action group representing the annuitants (Equitable Life Trapped Annuitants or ELTA for short).  The individual claimants irrevocably delegated authority to the company to conduct the claims on their behalf. 


Clarke Willmott partner Paul Chapman, also representing the claimants, adds: “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.”



The action was led by financial services litigation partners Robert Morfee and Paul Chapman with strong support from commercial dispute resolution partners, William Whiteley, Michael Clarke and senior associate Owen Williams. 


A paralegal team, led by associate Jon Green, provided the individual case handling and document handling services. Jon also had responsibility for three of the nine lead claimants. The other six lead claimants were each represented by an individual solicitor drawn from the financial services litigation team, Philippa Hann, Stephen Searle, Sharon McHugh and Stephen Cannell.