More than 400 with-profits annuitants have reached a "settlement" in their case against Equitable Life just over two weeks before it was due in the High Court.
Details of the settlement for the 407 claimants, who argue they were mis-sold their annuities by the firm between 1990 and 2000, remain undisclosed.
The group had brought proceedings in the High Court in 2004 and the trial was set to start on 28 January this year.
The claimants’ complaints were, firstly, that the complexities and risks attached to the product were not fully explained to them.
Secondly, they argued the additional risks posed by being dependent for their income on Equitable Life’s with-profits fund, and the weakness of that fund, were also not explained.
The firm’s with-profits annuity is an investment linked annuity with the income provided being linked to the performance of the Equitable’s with-profits fund.
Equitable has recently obtained the backing of the overwhelming majority of its with-profits annuitants to the transfer of these contracts to the Prudential.
Robert Morfee, the partner at law firm Clarke Willmott representing the claimants, says: “The claims were exceptionally complex and involved a detailed analysis of a very intricate financial product and the regulatory process surrounding the advice which must precede the sale of such a product.
“Furthermore, we had to reproduce the detailed examination of Equitable’s finances undertaken by Lord Penrose, whose report to the Treasury published in March 2004 first revealed that Equitable Life’s financial difficulties were due not solely, or even mainly, to their difficulties with guaranteed annuity rate policies, but were caused because the whole business model was flawed.”
The average age of the claimants was 74 and some of the claimants have died since proceedings began.
Clarke Willmott partner Paul Chapman, also representing the claimants, adds: “This has been a long and complex action. We are absolutely delighted with the result as are the individual claimants.
"They can now continue to enjoy their retirement without this burden hanging over them.”
020 7034 2636
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation