Equitable Life could be facing an initial claim of £50m in compensation from overseas policyholders ...
Equitable Life could be facing an initial claim of £50m in compensation from overseas policyholders as the first claims of mis-selling are filed with UK courts this week.
Around 1200 overseas policyholders - most of them now former members - have converged to sue Equitable Life and are expecting to take their individual cases to court to claim compensation of between £30,000 and £50,000 each, however, that figure could increase again as the firm dealing with overseas litigation claims is now taking on UK clients too.
Stephen Alexander, partner at the London-based legal firm Class Law, which is representing the group of 1200 policyholders made up of mainly British expatriates, argues policyholders have "a straight case of mis-selling" and says the first few cases will be filed this week so the first cases can be heard in court by March at the earliest.
Policyholders were misinformed on many issues, says Alexander, including how their assets were managed, Equitable Life Group's financial position after the Guaranteed Annuity Rate case was concluded in 2000 and whether they should have been sold the policies in the first place.
In particular, Alexander says Equitable documents received by investors intimate, among other things, that funds holding the assets of international policyholders would be ringfenced as separate funds from the UK with-profits fund.
Many of those investors also should not have been sold the fund in the first place, claims Alexander, as Equitable Life International sold policies in countries as far afield as Australia and the Far East, where it is now thought Equitable was not registered to do business.
"People were promised all manner of things, and it was only a year ago that some people were sold products but they were not told of the guaranteed annuity rates outcome, or of any other problems," says Alexander."
"People living in Belgium, for example, should not have been sold policies because Equitable is not registered there. This is clear cut mis-selling," he adds.
While most of the overseas policyholders still live abroad, their cases are being put through the UK county courts as Equitable is a UK-based firm and because they can handle civil cases claiming up to £50,000 at a faster rate than were the cases to be dealt with as a collective elsewhere.
According to Alexander, Equitable has set aside £200m to compensate with-profits policyholders through the Society's Compromise Scheme of Arrangements for the uplift of Guaranteed Annuity Rates (GARs) and non-GARs which were cut by 16% in July 2001.
To meet this deal, Equitable needs a majority of at least 75% in value of the votes in the GAR class and in each of the non-GARs asset classes in order to receive compensation.
The final vote will be held tomorrow at a special meeting with policyholders in Wembley.
A spokesman for Equitable Life says the firm is unable to comment on the case of the overseas policyholders at this stage.
For further information about the Class Law action, click thru the right-hand link to their website.
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