International Policyholders



Some Letters Regarding International Policyholders

Letter from Margaret Felgate to GFSC Director Peter Neville.


Thank you for your email of 16th August with the attached press release containing the appointment of Norton Rose.


EMAG International members are glad that the GFSC has finally acted, but are concerned that GFSC's brief to Norton Rose will be to genuinely investigate FULLY the legal position of the Guernsey POLICYHOLDERS and NOT simply to protect the interests of Guernsey Financial Services Commission and the Balliwick.


If it is thought that the GFSC will not allow ALL possible evidence to be presented to Norton Rose for consideration, especially in time for the Court to decide that Guernsey policyholders should be treated as a separate class for the 425 Scheme of Arrangement, it could negatively affect the Balliwick´s image as a well regulated and policed financial centre..


Our members in countries around the world,  feel they were tricked into buying, what have become defective policies. Nicholas Warren said in his opinion "effectively, the non-GAR policyholders are therefore left with policies which could never have been marketed to them had the true position been known" 


Policyholders were unaware until very recently that the monies they believed they were investing into a Guernsey BASED fund, were actually being received by a " a post office box" under the auspices of Bacon and Woodrow and remitted to ELAS in Milton Keynes.


Page 3 of the Equitable Life Booklet IIP7mkt 7.91 states "What is an International Investment Plan?" 


"BASED in Guernsey one of the Channel Islands, the fund enjoys the benefits of an environment of political stability and high regulatory standards (?????) as well as favourable tax treatment". The back page states that Equitable International are regulated by the Personal Investment Authority. Yet in an ELAS  letter dated 4th May 2001 it is stated:


"As our International policies are sold through our branch in Guernsey they are NOT regulated business and the PIA rules relating to the sales process and the giving of advice do not apply"


At the AGM in May 2001 both the Chairman and Managing Director of ELAS stated, and have subsequently confirmed in writing, that the International funds were "identified assets"  yet the very same "identified assets" are allowed to be used to meet the GAR liability in a country and by a jurisdiction, The House of Lords,  which has no relevance whatsoever to many International policyholders who neither reside in that jurisdiction and who may not even be British.


Page 5 of the same 1991 Policy Booklet states "The booklet and the Policy and any endorsements issued for attachment to the Policy shall be interpreted in accordance with the laws of Guernsey" but Guernsey policyholders find that they have been subject to the Laws of Great Britain and it's House of Lords decision. Where does the law of Guernsey stand in this matter?


We also find that the Republic of Ireland, German and Dubai with-profits policies have received different treatment with respect to the GAR liability than those of the Guernsey with-profits policies, yet we are all invested in the "same pot" according to ELAS. 


Then there is the issue of "pass-porting" Guernsey products and their sale in certain other countries. We understand that any ELAS Guernsey based products sold within the EU must first have DTI approval,  then be approved by the equivalent body in the country where they are promoted/sold. We understand Equitable never formally adhered to this regulation.


Our members are presently submitting other evidence to the EMAG International co-ordinator which we believe will show "Contractual Rights". Please confirm that I may forward such evidence to GFSC for submission and FULL consideration by Norton Rose. Also as GFSC is representing Guernsey policyholders we would be glad to know that EMAG could be considered privy to the legal brief to ensure that our claims and concerns are fully incorporated.


Please be assured that EMAG intends to act responsibility on behalf of it's members and seeks to work closely and amicably with GFSC. In this regard, and as requested,  I confirm that I can be contacted at any time for further information or assistance.


Yours sincerely,


Margaret R Felgate

EMAG Committee Member for ELAS International Policyholders


You may wish to know that our membership includes policyholders in the following countries:


Guernsey, Jersey, Ireland, Germany, Spain, France, Belguim,  Switzerland, Austria, Poland, Cyprus, Turkey, Greece, Finland, Sweden, Dubai, Bahrain, Kuwait, Saudi Arabia, India, Japan, Thailand, Malaysia, Singapore, Hong Kong, Australia, New Zealand, South Africa, Tanzania, West Indies, Canada, USA, Chile.




Dear Ms Felgate




Thank you for your e-mail of 18 August and for your confirmation that you are seeking to work closely and amicably with the Commission.  I believe it is in the interests of the Guernsey branch policyholders for us to co-operate with you as we seek advice from Norton Rose.


The Commission has, on its own behalf, instructed Norton Rose to consider a number of issues arising from the operation of the Guernsey branch of the Equitable. We wish to give you comfort that the brief has included many of the issues that you have raised including:


1)      whether ring-fencing the assets of the holders of policies issued in Guernsey may be possible, as alluded to in the Warren opinion;


2)      the application and scope of the UK Policyholders Protection Act with regard to these policies; and


3)      whether the Guernsey policyholders would constitute a class for the purposes of a Section 425 Scheme of Arrangement.


We will of course make all relevant information available to Norton Rose, for example, we have provided to them your email of 18th August, and would be pleased if you would forward to us any information which you believe will assist them in their deliberations.


I would be grateful if you could forward to us information on the different treatment of the Republic of Ireland, German and Dubai with-profits policies, and any evidence that ELAS did not take the required steps in respect of the promotion and selling of policies into the EU from Guernsey. 


We will ensure that policyholders are properly informed once Norton Rose’s opinion is available. Thank you for your confirmation that we may contact you for further information and assistance. 


Yours sincerely



Peter Neville

Director General

Guernsey Financial Services Commission

Letter written by a policy holder who feels enormously let down

The problem with arriving late, as I have, to an issue, is that you run the risk of wasting people's time by telling them what they already know. So, if that is the case, apologies for this:


I want to get out of EL because I now fear that, in spite of all the protestations to the contrary, before long they will go bust.


Having invested a lump sum in EL International only recently (i.e. having amassed very little so-called final bonus), it appears that, if I transfer my fund to another company as a going concern, the great majority of the 16 percent levy would be taken out of my own, real money, rather than the promised final bonus. Then I would still have to take the 7.5 percent hit on transferring.


One of the few advantages of having just turned 50 is that I have the option of taking a pension instead. This means (if I live long enough!) I don't have to lose the 16 percent, or the 7.5 percent, and, if I buy the annuity from EL, I won't have to go through another paperchase like the one I've just had transferring two other UK-based EL pension funds to another provider.


However, in trying to set this up today with EL's International client servicing people, they warned that my annuity, if purchased from EL, might stop being paid if EL became insolvent. When I expressed disbelief, the person I was speaking to took advice from another and then assured me that this was true, although they did not know why this was the case.


I then called the FSA, who were surprised because they said all annuities set up by UK companies were covered by the Policyholder Protection Act. They suggested I talk to the Guernsey Financial Services Commission, who said that EL Guernsey policies were NOT covered by the Policyholder Protection Act. It seems that Guernsey has its own protection scheme, but EL policies issued by the Guernsey branch are not covered by that either. This, they said, is precisely because EL's branch in Guernsey was just that - a branch of a non-Guernsey concern. The person I spoke to seemed very knowledgeable about this and hinted that they had had similar enquiries from other EL policyholders.


I'm sure this is old news to EL International policyholders who've taken a closer interest in this than I have, but I wanted to make sure that no-one is left under any illusion about the degree of risk that seems currently to attach to pension funds, or annuities, arranged by the Guernsey branch. And, if it IS a 'branch', are we entitled to ask why the products it sells aren’t protected in the same way as those sold in England?


I am now trying to transfer my funds into another company for immediate vesting.    

Below are two letters written by Margaret Felgate to Vannie Treves and Lovell's Equitable's lawyers, pointing out that members with International Policies should  be considered as a separate group when it comes to voting for the compromise agreement.

Mr Vanni Treves, 


Equitable Life Assurance Society

Walton Street

Aylesbury, Bucks HP21 7QW



Fax: 0044 1296 386383 (sent by fax and recorded delivery letter)


25 June 2001


Dear Mr Treves,


International Pension Plan Policy No xxxxxxxx

I quote an excerpt from the ELAS annual statement addressed to International Policyholders, dated February 1999 pertaining to the accounts of 1993, signed by R. I .I Ranson, Managing Director and Actuary.  Under the heading 1993 declaration it states:


"It has always been our intention that, while our International Branch business is in an early stage of growth, returns passed on to International Branch with-profits policyholders should be linked to those passed on to our U.K. policyholders.

This approach can be interpreted as viewing our International Branch and U.K: policyholders as effectively participating in one global with-profits fund, and means that the distortions and fluctuations in performance normally associated with small funds can be avoided. Ultimately, our International Branch with-profits business will be considered as an independent fund and bonus rates for thuis business will from then on be given separate consideration".


The International fund, by the admission of Mr Charles Thomson at the roadshow in London March 2000,  were stated to be "identified assets".  The number of policyholders in the International Pension plan are approximately  Ireland 16,000,  Dubai 2.500, Guernsey 10,500,  and Germany 4,500 totalling approximately 33,500 International Pension Plan policyholders and I therefore refer you to the statement of ELAS past Managing Director as to the ultimate position of the offshore fund i.e. that it is an independent fund.  As such it cannot be used to meet the liabilities of another fund and the assets must be "ringfenced".


I understand that the GFSC is treating the situation with Equitable very seriously and that following the publication of the Warren Report, in the interests of Guernsey's branch policyholders, the Commission has requested that Equitable reviews the issues raised, specifically, the differential treatments of the International policyholders.


I therefore ask that the International with profits fund is re-instated to it's true value and that the participants are fully compensated for the period when no bonus was paid and for any other financial disadvantage suffered due to the problems with the onshore fund.


In the matter of the Sections 425 Scheme of Arrangement I would ask on behalf of myself and all International Policyholders that our identified assets are declared separate and distinct for the purpose of the Compromise vote on the GAR liabilities based on the 1993 statement of ELAS and the published opinion of Warren.

Yours sincerely,


Margaret R Felgate


 c.c. Lovells

       The FSA

       The GFSC      



65 Holborn Viaduct

London EC1A 2DY



Fax 0044 - 0207 296 2001


13 June  2001


Dear Sirs,


Equitable Life Insurance Society

I understand you are the solicitors for ELAS and I write in connection with voting classes for the compromise vote to take place later this year.


I hold a Guernsey International Pension Plan - Policy No XXXXX and  together with many other Guernsey policy holders am concerned that our special interests will not be served in the upcoming vote unless the "identified assets" for the offshore polices be declared as separate from the main with profits fund and not available to cover GAR liabilities.


The Warren Report suggests that the House of Lords legal judgement does not prevent the Society from treating International policies as separate. I fully expect the Society to take account of this legal opinion.


The Guernsey Financial Services Commission have recently written that they are treating the situation with Equitable very seriously and following the publication of Warren, in the interests of Guernsey branch policyholders, the Commission has requested Equitable to review the issues raised, specifically the differential treatments of the International policyholders.


Therefore on behalf of myself and Guernsey Policyholders I would request that the identified assets of the International Policyholders are declared separate and distinct for the purpose of the compromise vote on the GAR liabilities.


Yours faithfully,


M.R Felgate