Equitable's last Lords hope dashed

By TOBY WALNE, CHIEF MONEY REPORTER
Updated:

 

EQUITABLE Life is abandoning a last-ditch attempt to overturn the Law Lords' ruling that forced it to stop accepting new business. Top City lawyer Nicholas Warren QC is expected to tell the insurer's bosses on Tuesday that its bid to avoid a £1.5bn payout to 90,000 policyholders is effectively dead.

Warren was brought in by Equitable two months ago to study the small print of last summer's ruling, which said that Equitable acted unlawfully in cutting terminal bonuses to guaranteed annuity holders. His brief was to search for a legal loophole to turn the decision on its head. Warren's report will be bad news for Equitable's 450,000 with-profits policy-holders, whose bonuses are being cut to pay the guaranteed annuities bill.

The way will now be clear for a poll this summer in which all Equitable members will be asked to vote on whether guaranteed annuity holders should take a one-off payment as a reward for relinquishing their rights, which would bring an end to the crisis. Details of how the poll will be conducted will be published in time for Equitable's annual meeting on May 23.

Halifax agreed to buy Equitable in February for an initial £500m, to be followed by a further £250m if the 238-year-old mutual manages to cap the guaranteed annuities bill, and another £250m if Equitable's sales force meets certain sales targets over the next two years.

Equitable chairman Vanni Treves said: 'It is now unlikely that we are going to be capable of revisiting or revising the Lords decision. It is fair to say that it would take exceptional circumstances for anything to change - that is the bottom line.'

Treves said Warren's 40-page report was 'exhaustive and covers every angle' of Equitable Life's problems. The report is expected include new evidence on how Equitable mismanaged the crisis.

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