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Members Newsletter - August 2004 |
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Members Newsletter 18 August 2004 I thought it was about time I brought you up to date with the actions of ELTA since the Claim Form against the Society was issued on July 15th 2004. The first point I wish to emphasize is that ELTA remains an organization dedicated to working for ALL WPAs by
These
objectives have not changed. New
members are continually sending us their contact details and joining the ELTA
group. We would like as many members as is possible and that gives us more
strength so if you know any other WPAs who are not members please encourage
them to join us. It might be useful if I reviewed the ways by which compensation might be achieved, though I must emphasize that some of these solutions do NOT apply to all of us and obtaining compensation one way may be used to offset any compensation achieved by another. There are several ways by which ELTA members may be compensated: a) Suing the Society for mis-selling. This action is already in process and more details about this can be found in the Section of the ELTA web site titled Litigation Information. You will recall that we constantly emphasized that we had to issue a writ before July 15th 2004 in order to prevent the claim being stopped under the Limitations Act. At present we have a relatively small group, 733 to be precise, who are participating in the litigation but that leaves another 1,500 members of ELTA who chose not to join in this specific claim for compensation. However, what many of you may not appreciate is that if the contract date for your annuity is less than 6 years old, then you can still join in the group litigation that ELTA has initiated with Clarke Willmott since you are not time barred. So, if you fall into this category, then you should consider contacting Clarke Willmott and discussing your situation with them. You must be joined to the Claim Form before the expiry of six years from the date of your annuity. b) The Rectification Scheme. Many WPAs bought their annuity from money saved with a GAR policy offered by the Society. As you will know, the Society is legally bound to offer compensation if they failed to offer you the correct annuity when the sum was converted. Peter Butler runs the ELTA sub-group for these members and if you have any questions then please contact him. The
Rectification Scheme Working Party has made representations to the FSA on the
inadequacy of the offers now being made under the current Rectification Scheme.
The damage suffered by the WPA was caused by the Society’s failure to provide
the correct information on the size of the fund and the amount of guaranteed
annuity entitlement at the time of purchase. An
offer of a supplementary level annuity on the recalculated final bonus only does
not compensate the annuitant who was misled into buying a smaller risk-bearing
annuity instead of a higher guaranteed one. Our view is that the correct redress is to offer the annuitant the opportunity of revisiting his initial decision and choosing the GAR annuity which he was entitled to at the time of purchase, and the annuitant is entitled to ask to be given the correct information on size of fund and annuity that he should have had at the outset. Notwithstanding
this some members may be inclined to accept the offer but are uncertain about
signing the Form of Acceptance from ELAS. We also have reservations about this as the offer comes couched in terms
that appear to be quite subtly phrased .We cannot unfortunately offer legal
advice that would cover all cases but feel we should make the following
comments. a) Ensure that you are not prejudicing your rights to make claims on other policies, related or not. b) The amount being offered does in fact compensate you for your loss. The reason
we offer this caution is that the acceptance form requires you to sign away
claims you have against the Society in respect of the Policies listed. There is
an ambiguity in the form of wording since it could be interpreted as covering
ALL of your policies. With
regard to Rectification scheme, you have to remember that there are at least 2
policies involved; first the policy, which matured before the House of Lords
judgment, and second the new policy, which was taken out using the proceeds of
the first policy. The
first policy had GAR rights and the Rectification Scheme applies to this policy.
As that policy matured before the House of Lords judgment in July 2000: a)
The
Differential Terminal Bonus Policy (DTBP) would have been applied. b)
It was not caught by the Compromise in early
2002, as it was no longer subsisting at the date of the compromise. The
second policy, in the case of ELTA members, would be a With Profits annuity
policy, which was subsisting at the time of the compromise and is therefore
caught by the terms of the compromise. Holders of these policies cannot make any
claim against ELAS in respect of that policy in relation to any GAR related
claim. A GAR related claim includes anything to do with GAR rights, the
existence thereof and also the DTBP. The
essential point to grasp is that the rights attach to each policy and NOT to
each policyholder. Thus it is important to ensure that the Acceptance Form
relates only to the first policy and that only the number of the policies that
matured prior to the House of Lords judgment appears at the top; that is to say
the first type of policy. Since
the form of wording of the Acceptance Form might be deemed to be ambiguous as it
might apply not only to claims arising out of the first policy but ALL CLAIMS
attaching to any policy, (e.g. The second or the WP annuity policy.) we
therefore suggest that when returning the signed Acceptance Form the
policyholder should include in the covering letter the following: 'To
avoid any doubt I have signed the enclosed Acceptance Form on the basis that it
only relates to claims arising under the policy number(s) appearing at the top
and it does not relate to any claim I may have under any other policy which I
have or had with the Equitable Life Assurance Society' The
policyholder should make sure they keep a copy of the acceptance form and the
covering letter containing the above statement. As
ever, I must remind you that all of us working for ELTA are retired businessmen
who are doing this work for ELTA on a voluntary and unpaid basis. We are not
qualified to advise you other than to advise you to get professional advice,
either from Clarke Willmott or some other organization that you know. ELTA
cannot accept any responsibility therefore for any suggestions we might make or
if you act on them. If you are in doubt seek professional advice. c) Regulatory Failure. As you will know, the Parliamentary Ombudsman has initiated another enquiry this time much more wide ranging and looking further back into the origins of the problems at the Society and the role that various Government departments had in allowing the Society to act as Lord Penrose indicates in his report without taking corrective action. The ELTA committee submitted its own comments to Ann Abraham and they were incorporated in her report to Parliament that was published in July. ELTA will be involved in submitting more reports and information to the new enquiry to ensure to the best of our ability that the special needs of the With Profits Annuitants are not overlooked. This report and any compensation that she decides is due to ALL of the Society’s members is no doubt many years away from completion, but there is no reason not to suppose that this compensation for Regulatory failure will not be in addition to any compensation awarded by the courts for mis-selling. However, the Government if it decides to make any payment, will probably make any payment to the Society, which in turn will make its own decision what it does with the money! The point that must be emphasized is that we must keep the plight of the WPAs constantly in everyone’s mind so that we are not overlooked. This will be done by preparing reports for the various bodies looking into the failure of the Society but also ensuring that we are continually represented in the media. What the newspapers want is stories about WPAs who are suffering as a result of the reductions imposed on them by the Society. So what we need is the names of members willing to talk to the media and tell their story. In my experience the media are very respectful of people’s privacy, unless you are already in the public eye, so you need have no fear that all your secrets will be headline news in the local or national newspaper. What the media want is comments and responses as events unfold from a wide selection of WPAs and not just their regular contacts such as Paul Weir, Anne Berry, or myself, etc. So if you are willing to “tell your story” then please contact Paul Weir either by phone or e-mail. His contact details are: E-mail: elta@paulweir.co.uk Of course all of this work will require more effort by the committee and will require professional support for PR and other expertise. We are therefore planning to ask for a subscription fee from all members of £20 per WPA per annum. We will use this money to pay the costs of our PR consultant, Paul Weir and the cost of our accountant, Stephen Pearl and maybe others plus of course the increasing expenses of the committee, such as Travel & Accommodation, Phone bills and Computer and related costs. But first we have to set up an association to deal with this with its own set of rules, bank accounts, etc so PLEASE DO NOT SEND ANY MONEY UNTIL ASKED. As ever, your input is appreciated so if you have any ideas that you think will help our cause please let us know, especially if you are willing to volunteer some of your time to make it happen. Peter Scawen
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