Equitable Life


supporting the With-Profit annuitants of Equitable Life


Bulletin No 5  April 2005 

From      Peter Butler

Email      pdbutler@ntlworld.com

Tel.         020 8466 6446

In Bulletin 4 we published our Formal Complaint to the FSA  Complaints Commissioner Sir Anthony Holland on the unacceptable role of the FSA in the introduction of the revised Rectification Scheme 2003.


Initially the Commissioner rejected our submission unless we could provide evidence of “misconduct” by the FSA and so we responded with the view that evidence of “misconduct” existed in the Society’s explanatory booklet entitled Rectification Scheme 2003 which included the following phrase


“Although the scheme is not regulated by the FSA we have developed it in conjunction with the FSA and we have taken account of their comments and suggestions. The FSA have confirmed that they do not object to the scheme as it stands”

This suggested that the FSA were pro active in the design of a scheme with watered down benefits from the original Scheme.


The Commissioner then decided that our Complaint did not fall within his remit and suggested it be directed to the Financial Ombudsman and he published his decision on his website on 24th April.( http://www.fscc.gov.uk/).


We have therefore made a submission to Mr Walter Merricks the Financial Ombudsman and await his response.





Mr Walter Merricks

Chief Ombudsman

Financial Ombudsman Service

South Quay Plaza

183 Marsh Wall

London E14 9SR


12th April 2005


Formal Complaint on the Equitable Life Rectification Scheme 2003


Dear Mr Merricks


I am writing on behalf of a Working Party of Annuitants from ELTA (Equitable Life Trapped Annuitants Association) on the recommendation of Sir Anthony Holland the FSA Complaints Commissioner.


Our Working Party was set up following many representations by email from With Profits Annuitants who were awaiting reviews of their annuities under the Society’s Rectification Schemes. The first of these was implemented by the previous Board of the Society in 2001 to comply with the requirements of the House of Lords Decision in the Hyman case, but after several years this scheme was scrapped by the new Board and replaced with a watered down version named Rectification Scheme 2003.


However the original Rectification Scheme was the subject of an independent review as to its fairness and compliance with the Hyman case decision by two eminent members of the legal and actuarial professions. In replacing this scheme with Rectification Scheme 2003 the new Board has not published any evidence of independent expert scrutiny. Instead it appears to have relied upon anonymous and unpublished “legal advice” and the enigmatic FSA comment that it “does not object” – hardly wholehearted endorsements even were the FSA’s opinion to carry the same level of authority as that of the previous professional adjudicators.

The Case Against Equitable Life

The original Rectification Scheme had been properly set up- with advice and guidance from Independent Professionals - to provide annuitants with the correct redress. The revised scheme was published late in 2003 and offers began to roll out from the spring of 2004.


At that time we learned there around 17,000 cases still to be reviewed. These were mainly with profits annuitants who initially subscribed into Equitable Pension Policies with GAR rights but had chosen to acquire with profits annuities instead of annuities with the Guaranteed Fixed Rates to which they were entitled. There had been clearly a policy of persuading policyholders to opt for the with profits annuities from 1994 onwards (when the dual bonus practice was introduced) and the majority of the annuitants in our group say they had not been aware of their rights to guaranteed annuities. This we believe to be generally true with the majority of all annuitants who signed up to a contract many years ago which included many pages of highly technical pensions type data including tucked away on page 15 of the document a “Schedule of Guaranteed Annuity Rates” It is also true that at the time of their annuity purchase many annuitants had not been given correct information on their final bonus entitlements and had therefore made annuity purchase decisions without full and correct financial facts.


The offers we have seen being made since the spring of 2004 have been couched in opaque language without proper explanations of the calculations and requests for further detailed clarification have frequently been met with a negative and unsatisfactory response. We have therefore formed an impression that the Claims Handling Organisation dealing with this Scheme does not have the detailed information requested nor the necessary analytical skills to explain it.


In scrapping the initial Scheme the current Board contend that it was “unfair” to other policyholders but the argument of “fairness” was also used by the previous Board in introducing the Dual Bonus Policy. However as we know the House of Lords judged that “fairness” has to give way to legal correctness and it most improper and unfair that the current Board are relying upon anonymous legal advice to justify their action.  

The Case against the FSA

In addition to the above case against the Society our complaint is also against the FSA who as the regulatory authority have not only condoned this unsatisfactory scheme but also according to the Society’s literature have been pro active in its design. The evidence is in the Society’s explanatory booklet on the new scheme, which includes the following statement


“Although the scheme is not regulated by the FSA we have developed it in conjunction with the FSA and we have taken account of their comments and suggestions. The FSA have confirmed that they do not object to the scheme as it stands”

We submit that the revised scheme does not provide annuitants with the correct legal redress and following The Society’s refusal to discuss this with us,we made representations to the FSA. These were rejected on grounds we found unacceptable and so we then made a Formal Complaint about the role of the FSA in this matter to the Complaints Commissioner Sir Anthony Holland a copy of which is attached together with Sir Anthony’s Final Decision. We have been told that a provisional date for publishing this on a website is 18th April.


In essence Sir Anthony is saying that this complaint does not fall within his remit but recommends that it should be addressed to the Financial Ombudsman Service.


Action Required

The FOS will already have received many complaints from distressed annuitants about the inadequacy of the offers being made to them under the revised Rectification Scheme together with their concern at being given a 28-day deadline to sign and Acceptance Form giving up any further legal rights of claim. We believe that more complaints will be sent in and that the pattern of these complaints will reinforce our submission to you.


We hope that these cases are ones that can be resolved with your help. Time is running out for the many elderly annuitants who are now subject to stress and unforeseen financial burdens.


Specifically we request as a matter of great urgency that Equitable Life be directed to comply with its obligation to provide each policyholder (within the Rectification Scheme) a comparative statement showing


·        The initial starting with profits annuity that he acquired, and

·        The guaranteed annuity that he could have chosen if he had been given the correct information at the time of annuity purchase


This information could of course be amplified with supporting detail for the purposes of clarification and it is lamentable that after 4 years the Society has not found the will to do this.


The annuitant should then be given a period of say 3 months to decide whether to


·        continue with his current annuity  or

·        replace his annuity with The Society at the Guaranteed rates within his pension policy


All of these calculations would of course require proper financial adjustment for interest and tax.


The issues we have raised are technical and complicated and we would be happy to assist by attendance at a meeting for clarification discussions.


Yours sincerely



Peter D Butler




We understand that over the last 12 months a large percentage of the 17,000 review cases have been completed, but there is still a backlog of some of the more complicated cases outstanding.


Annuitants who are dissatisfied with their offers have to register a “formal complaint” which can eventually be submitted to the Financial Ombudsman. We do not know how many cases have been submitted but we have been told that the FOS are “snowed under” and struggling to deal with these cases. We hope therefore that our representation to Mr Merricks can be cross referenced with those cases and possibly assist in their resolution.


We have also been told of instances where dissatisfied annuitants have been advised by the Society to present their cases to the Pensions Ombudsman but far have not been advised of any specific cases that have benefited from that activity so far.


We would welcome news of any cases that have received beneficial results from submissions to the FOS or the Pensions Ombudsman.


With best wishes from the Working Party


Peter Butler