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Court to rule against Equitable Life

The Law Lords are expected to rule against Equitable Life in a landmark court case which could shake up the insurance industry.

The court will likely say the life office can not offer different interest rates to customers purchasing the same pension from the company.

The two year old controversy has arisen from a dispute over one of Equitable&#39s products, guaranteed pensions. These policies promise a minimum level of income upon retirement.

As interest rates have fallen, these policies have become very valuable, and Equitable has moved to lower bonus rates on them.

The court&#39s anticipated ruling will result in customers and the company losing out because Equitable will logically choose the lower rate of interest. If this happens, a new round of legal battles may result, as policyholders dispute the move.

Equitable sold 90,000 guaranteed pensions between 1963 and 1988. This decision affects the 30,000 who are nearest retirement.

Industry sources predict the life office would be greatly weakened if it were eventually forced to pay the full amounts on the policies. Such action could leave it vulnerable to a takeover bid.


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