Equitable Life

Trapped Annuitants

supporting the With-Profit annuitants of Equitable Life

Last Updated: Tuesday, January 12, 2010 18:00

 

REPORTS submitted by ELTA

Sir John Chadwick

Public Administration Select Committee (PASC)

Parliamentary Ombudsman

European Parliament (EQUI)

Other Documents

 

 

CONTACTS

Your MP

ELTA Message Board

 

 

OTHER WEB SITES

EMAG

ELCAG

Equitable Members Help Group

Equitable Life

The Motley Fool (Equitable Life)

 

 

 

 

ELTA – The Reason Why

ELTA was set up in 2003 as I considered at the time and as time has proved the With-Profits Annuitants (WPAs) of Equitable Life were let down by the Regulator for the following reasons.

1. The purpose of compulsory annuity purchase is to require individuals to secure a safe and reliable income for retirement when, crucially, they will be unable to supplement their income from alternative sources. Since this is a key statutory requirement that an individual MUST buy an annuity, it follows that the regulating authorities have an absolute obligation to ensure that the products offered on the market can meet that statutory objective. Any failure to do so must inevitably result in a justified claim for mal-administration.

 

2. The With-Profits annuity (“WPA”) was a particularly complex financial product, poorly understood by the annuitants who purchased it and many of Equitable’s representatives who sold it. It was predicated on the belief that the Equitable Life Assurance Society was a properly regulated, blue chip, institution of sound financial standing. Annuitants would not have purchased the product had they believed otherwise. More than any other product the Equitable’s finances were key. Without its apparent financial strength, the product could not have been sold

ABOUT ELTA  

 

Welcome to ELTA, which is dedicated exclusively to work for ALL of the With Profits Annuitants of Equitable Life, now with the Prudential, and who are members of ELTA and all those who are not, but hopefully who will also benefit from our work.

 

ELTA is part of E7, which consists of the seven Equitable action groups who have all combined in their fight for government compensation.

 

ELTA has an advisory committee which at present include:

 

Richard Griffiths

Steven Pearl

Roy England

John London

 

The co-ordinator of this committee is Peter Scawen.

 

If you would like more information, to join ELTA or wish to contact him you can do so at:

00 33 5 56 71 96 47

 

La Levaille

33220 Caplong

France

3. Three core issues differentiate with-profits annuitants:

 

a.

Their inability to surrender the policy or transfer it to another provider;

b. 

The importance of the purchase in the context of providing a safe and reliable income, when the individual’s abilities to find replacement income were increasingly remote; and

 

c.

The increase of their losses as they get older because of the central role of the increasing, but un-guaranteed terminal bonus that was required to maintain their retirement income.

 

4. The WPA was deeply flawed as a source of retirement income. Probably it could never have delivered what it promised. The risk annuitants were invited to accept was the risk of the market, hedged by Equitable’s (allegedly) superior financial management and adequate reserves to support a smoothing policy. In fact there were no reserves to cover terminal bonus policy, no smoothing policy and Equitable was managed incompetently. The ever-increasing gap between the “guaranteed” annuity and the total annuity was not covered by reserves, nor did it feature as a liability in the accounts and statutory returns. It could therefore only be met either by an ever increasing sales effort, so that new investments were required to meet the obligations of the old, or, as occurred from November 2002, by not paying it. In effect, Equitable created a pyramid scheme.

 

5.  There was a significant failure of regulation. It was the responsibility of the regulator to ensure that the products on the market were in fact capable of delivering what they were offering, since annuitants are reliant on the regulator to carry out the sort of tests that lie beyond the competence of the general public.

 

6 The Ombudsman’s three critical findings that the information on financial standing was incomplete, that liabilities were understated, and that the solvency position was not appropriately verified leading to a misleading picture of the financial health of Equitable, mean that the clear injustice sustained by With-Profits Annuitants was the purchase of a product, which, without this mal-administration, they would not have purchased.

READ: Peter Scawen's Report - Equitable Life and its Handling of With Profits Annuities



ELTA is not authorised to give individual financial advice