Policyholders in Equitable Life are well positioned to take on the government in European courts according to legal advice from the company's own QC's, reports The Daily Telegraph.
The advice comes on the basis of a reading of the European insurance directive, suggesting government regulators failed by over-emphasising the value of a reinsurance contract in the company’s accounts.
The £809m contract, enforced at the behest of the FSA in 1998, was nullified by the House of Lords ruling in 2000, the Telegraph writes.
The Scotsman says the European option is balanced against news the company has found no grounds for challenging UK regulators in the UK, according to a letter being sent to some 350,000 members.
The letter also urges policyholders not to vote in favour of establishing a £2m fighting fund, proposed by the Equitable Members Action Group.
The company says that in light of its legal advice, it would not want to “squander” members’ resources on a legal challenge that offers slim hopes of a winning.
AVIVA IS another company facing legal issues after its business plan involving the closure of Hill House Hammond high street branches failed to recognise that the company did not have exclusive rights to offer products direct to HHH customers, the Telegraph writes.
Apparently, the panel’s insurers have the right to approach customers directly in the event of a “major” change – something NU, to which Aviva is trying to switch HHH customers – is challenging.
"We have never made the assumption that this is an automatic process. We refute any suggestion that we have misled anyone. We still believe we are going to transfer a large proportion of these policies to Norwich Union Direct,” the Telegraph quotes the company.
BANKS IN the US are preparing themselves for interest rate rises after more of them reported record increases in quarterly profits across all types of lending business, the FT says.
Wachovia, which yesterday reported its results, has joined competitors Bank of America and Citygroup in stating it expects rates to start edging up.
Wells Fargo, another of the biggest US banks, reports results later today, while JPMorgan Chase reports tomorrow, the FT adds.
ANOTHER COMPANY PREPARING for change is Shell, which has confirmed its chief financial officer Judy Boynton is being added to the list of heads chopped in the ongoing reserves scandal, the FT writes.
Yesterday the company admitted it had lied about its proven oil reserves to investors for far longer than previously hinted, although audits subseqently carried out have indicated there should be no further write-down shocks.
Shell remains an oil major, but it has been punished by credit ratings agencies, which yesterday dropped the company’s debt a notch and warned that any more surprises could result in further downgrades.
WORKERS KILLED IN “terrorist” incidents are likely to see their life policies provided by employers nullified under new insurance rules set to be introduced, the FT reports.
Reinsurers are pressuring life companies to insert clauses into corporate contracts to limit the amounts paid out on events such as the bringing down of the World Trade Centre towers in the US.
Evidence from that incident proved that insurers could be faced with situations whereby all members of a pension scheme could be “wiped out” at a single stroke.
GRUBBY TREASURY hands are trying to force banks to hand over money from dormant accounts – at least according to the banks – whereas the Irish model being studied by civil servants suggests up to half the estimated £15bn in dormant UK bank accounts could be returned to rightful owners, the FT writes.
Chancellor Gordon Brown is stepping up the pressure and those in the industry are getting “frantic” about how to counteract suggested moves by the Treasury, which are due to be outlined in the Pre-Budget speech this autumn.
A major issue is enabling widows to access funds of their deceased husbands, because many elderly people do not have the identification documents currently required to access the money – such as passports or drivers licences, the FT says.
In Ireland moves to force banks to open up dormant accounts to government scrutiny came amid a major banking scandal, which reduced opposition to new legislation, but the model of giving a slice of dormant money to charities is also likely to sweeten the pill for the UK industry, the paper suggests.IFAonline
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