INFORMATION BULLETIN and NEWS UPDATE

The lack of recent correspondence may have given you the impression that ELTA was no longer in operation but that is not correct. We have been very busy with the UK Parliamentary Ombudsman’s second report, due out later this year or early next year, and more recently we have been invited to make a formal presentation to the MEP’s enquiry into the affairs of Equitable Life in Brussels at the end of May.

We continuously monitor happenings at Equitable and reports in the media and take action where and when it seems appropriate. This is one such situation as there have been some recent developments, which may be connected, to which I wish to draw your attention.

Many With Profits annuitants have been invited to participate in the survey being carried out by a Market Research company based in Denver in the USA on behalf of Equitable. There is also much current speculation about a sale of the Society.

Equitable have stated that this is an annual market research exercise carried out by the Society in respect of the services that it provides to annuitants. Personally, I have never previously been contacted nor indeed have I met or heard from anyone else who has. I am unclear of the size or scope of this exercise and I would be interested in confirmation from any members who have been contacted for this survey or any previous surveys. Of course, because of the number of our members, I may not be able to respond individually to the feedback received.

The questions that are reported as having been put include the following:-

• “What do you think of the performance of Charles Thompson?”

• “Do you have confidence in Vanni Treves and the current board?”

• “How does Equitable compare with other life assurance or pension companies?”

• “Would Equitable be better off not investing in gilts?”

• “Was performance suffering as a result of not investing in the stock market?”

• “Do you think Equitable should be sold?”

·        “If there were to be a sale would you take advice on your position from: An IFA? Equitable themselves?  Friends and family?”

• “If the Society were to be sold would you be prepared to give up some of your annuity?”

• “Do you think your annuity will go up or down in the future?”

• “Where did you read about Equitable Life, i.e. which publications/newspapers do you read?”

• “Was Equitable right to sue the directors and auditors?”

• “Does Equitable keep you informed?”

The most significant of these questions seem to be those relating to the sale of the Society and the possibility that the annuity might fall further or that annuitants may be willing to exchange a fall in their annuity for a change of provider.

This brings me to the subject of sale speculation. I would not like to offer a firm opinion on exactly what is going on. However, the sale of a “book” of with-profits annuities I have been told is an uncommon event, if it has ever happened before. It is probable that Equitable will have to get approval from members and maybe even the Court to achieve this. Equitable would probably also have to get approval from the FSA. They seem to be attempting to get some kind of preliminary view about how the body of policyholders feels about the possibility of a sale, so as to help them get that approval.

We don’t want to be seen as obstructive. Many of us would dearly love to have an annuity paid by a company other than Equitable. We must be very careful however, about jumping out of the frying pan and into the fire.  We know absolutely nothing about the terms of the sale or what would happen to us if there were to be a sale. At the moment with-profits annuitants have a contract, which requires the Society, in good faith, to consider what bonuses to declare (or not), payable to us as our retirement income. I am concerned we do not end up in the hands of a ruthless commercial outfit that can cut our incomes at will with no redress, or avenue for protest.

The question about what policyholders might think about giving up some of their annuity is very interesting.  Maybe the unknown proposed purchasers are considering that annuitants would prefer security, but a lower current income, to the current uncertainty.  I guess much depends on how much lower any proposed replacement annuities are going to be.

My opinion is, therefore, that annuitants should not offer a view about a possible sale at least until it is known exactly what is proposed.

Finally, I should just like to mention the press release posted on Equitable’s web site about the results to the year ending 31 December 2005, this contains the following paragraph under the heading of “Litigation”:

“In 2004, a group of 873 with-profits annuitants commenced proceedings against the Society. There are now 413 annuitants who are still part of this action, the others having dropped out. There will be a further pre-trial hearing in the summer and the trial itself will probably take place towards the end of 2007. We continue to resist this attempt by a small group of annuitants to obtain additional monies at the expense of all other with-profits policy holders”.

We have seen comments before about the court case in annual and interim reports and accounts. However, this is the first time that something approaching hostility has been expressed by Equitable’s board.

There are one or two things I should like to say about this departure.

1.      Nothing is said about those who claim through FOS (of whom I am one). Nor is there any mention of any High Court litigants outside the group action (of which there are certainly some). The specific targeting of one group of High Court litigants may be because Equitable wants to bring pressure on those litigants. I don’t know, of course, but I am sure the comment is a tactical move by Equitable. Maybe it is intended to be divisive.

2.      The statement confuses the differing roles of the policyholder as an owner of an insurance company and his role as an insured. It is not improper or unfair to claim on a policy you have bought because it has matured. Similarly claimants have a perfect right to claim whatever is their legal entitlement to compensation for having been misled.

3.      Investing policyholders always have the choice whether to take their profits (or losses) on their policy and run. A great many have done so. With-Profits Annuitants do not have that luxury. Furthermore, we are at the end of our working lives, and cannot re-start our careers.

4.      The With-Profits Annuitants making claims against Equitable are doing so because they allege they were misled by Equitable’s sales force. It is a matter of public knowledge that Equitable has already admitted large scale mis-selling by its sales force and has already compensated other groups of policyholders.

5.      The Society continues to resist claims by With-Profits Annuitants, even though as pensioners they are in the most vulnerable position of all. It is wrong to suggest that trapped annuitants are trying to make excess profits at the expense of other policyholders.

6.      Many financial services firms, including Equitable, face mis-selling claims. However the difference is that Equitable took the commercial decision to self-insure against those liabilities. With-profits annuitants are as entitled to make claims as anyone else. If they do not do so, investing policyholders will have profited unfairly from the With-Profits Annuitants, who, unlike the investing policyholders, have no opportunity to move elsewhere.

ELTA has always sought to avoid making inflammatory public comments. We do not think it helps anyone. We are not going to respond in kind. The ELTA committee will continue to work for all with profits annuitants, and will resist any attempts to split our membership.

Finally, if your personal details have changed and you think that you have not advised me then please do so. Further if you wish to have your name removed from our mailing list then please advise me also.

My contact details are:

La Levaille

33220 Caplong

France

Phone: 00 33 5 56 71 96 47

e-mail: eltaorg@aol.com

The group of members who are working for all of our interests is still active and we all owe them a great debt of gratitude for their selfless support and energy.

Yours sincerely

Peter Scawen