Equitable Life and the IFA embroiled in a storm over the release of 450,000 policyholders' details have defended their actions.
But City lawyers and the former Data Protection Registrar, now called the Information Commission, believes the move breaks the Data Protection Act.
Equitable chief executive Chris Headdon says the company believed it was only supplying information to the members' action group, not to Bristol IFA Whitechurch Securities.
Equitable says it is obliged to provide the information to members.
Equitable says that, under the rules governing mutuality, it is obliged to provide details of policyholders when they are requested by other policyholders.
Headdon says: “We sold the list to the action group. They passed it on to the IFA. We assumed it was because they wanted to do a survey.”
But City lawyers specialising in mutuality and data protection say that unless there is a clause specifically written into Equitable's contract all-owing them to release a policyholder's details, they would be falling foul of the act.
Three other mutual UK life offices also say there is nothing inherent about being a mutual which would force them to release policyholders' details.
A Building Societies' Association spokeswoman says that while the rules governing mutuality of their members are different than that of life offices, it is virtually unheard of for a member to have access to policyholder lists. She says such a provision does exist in societies' constitutions but the restrictions are so many that it is never used.
The Information Commission says that, unless there is something specific in Equitable's constitution which says otherwise, it would appear that the first principle of the act has been broken.
Information Commission compliance manager Margaret Mainwaring says: “If the company did not tell policyholders originally that they were going to release their details, it would be a breach of the first principle of the act. The key question is what was established at the beginning of the policy?” IFAs are angry that another IFA firm has approached their clients. They are especially upset that it involves Equitable Life, when it is difficult for anyone to advise on the best way forward, given the uncertainty surrounding the company's collapse.
Lincolnshire IFA Cranwell Investments managing director Greville Price first raised the matter. He says: “This is complete nonsense. It goes against everything that I would have thought the Data Protection Act is designed to do. I find it very difficult to believe this is the case.”
Yorkshire IFA The Pension Partnership associate partner Kevin Anderson says: “My clients are saying, who are these people? Whitechurch seems to have appointed itself as the saviour of Equitable policyholders.
“It looks like an excuse to sell business. These policyholders are very vulnerable at the moment and it is not right for this company to be approaching them in this manner.”
Whitechurch Securities maintains it did not intend to approach IFAs' clients.
Senior investment manager Warren Perry said last week: “We have approached clients of Equitable Life, not of o
ther IFAs. We are a commercial operation. This is a commercial decision.”