equitable life

The report by Lord Penrose has cast much light on the Equitable Life story. It was gratifying to find that the wider public understands that the Equitable’s slightly pompous self-image as the Rolls Royce of life assurance companies concealed a very rotten interior. Throughout the 1990s, Lord Penrose informs us, Equitable Life had a negative estate in that its total promises to policyholders (by way of their policy values) exceeded by a considerable, but varying, measure the assets to back them. So it was not just the Hyman litigation, and the so called “unexpected” decision of the House of Lords in July 2000, which caused its demise. It was a long term financial problem caused by an attempt to buy business by declaring huge but unsustainable bonuses.

It is important, however, to distinguish between the mal-administration of Equitable as a life office, and what it did as a financial adviser. Equitable sought to imitate the relationship which a trusted solicitor or accountant might have with his clients. It had a high quality sales force, staffed in the main by intelligent and able people, who were fed the same stories about Equitable’s finances as the rest of us. The result, however, of its finances was that the advice which the salesforce gave would necessarily have been wrong and non-compliant with all the regulations governing financial advice from 1988 onwards (the inception of the Financial Services Act 1986).

The sales force was not always innocent. We have come across many instances when financial planning decisions were made on the basis of advice which was misleading and negligent in itself. For example many investors were told that their with-profits bonds (PIPS) were like bank accounts and they could make withdrawals when they liked. Others were given advice to take benefits from their pension schemes when they were really much too young and not ready to do so. Many clients have consulted us with these and similar problems.

So when we approach an individual client’s difficulties we look at the overall situation of Equitable and its with-profits fund at the time the investments were made. We also look at the individual personal advice which was given by Equitable’s sales force. The sales force is deemed to have the knowledge of the board, and is required, with that knowledge, to give competent financial advice. In practical terms, in one way or another, none of them did from about 1990 onwards.

We look at every client’s position individually. Each claim turns on its own facts of what the investor actually wanted, whether the products advised were suitable and what alternative investments would have been made if the client had been correctly advised. Each case is unique. We reject absolutely the Equitable’s “one-size fits all” method of offering the redress which in many cases it acknowledges is due.

In the majority of cases, we are prepared to handle Equitable mis-selling cases on a “no win no fee” basis as we are confident in our judgment of these claims and are prepared to risk our own fees on the outcome. We understand the anxieties a lawsuit can engender, and can help to minimise the stress involved.

We have now completed our first wave of Equitable cases through the High Court. All our clients won their cases and significant sums of compensation together with their legal costs. We are now gathering clients for a second wave of claims through the High Court.

We have a clear strategy for Equitable Life claims, and an experienced team to handle them. If you would like to know more, please contact Robert Morfee.

For our Equitable opinion, click here.