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Equitable in new compensation offer

Equitable Life is to put forward a new compromise scheme for the 70,000 former policyholders who have potential claims for misselling.

Policyholders say they should have been told before taking out a policy of the impending guaranteed annuity case.

Equitable predicts it will have to pay out will be between £40m and £75m following the delayed publication of the report – ordered by the FSA – by B&W Deloitte into the misselling claims. The report found the company&#39s performance was worse than its peers between July 200 and February 2002, suggesting some policyholders may have suffered financially. Equitable had already put £120m aside to meet the costs.

The new compromise agreement is effectively a creditor scheme, subject to both court and FSA approval, and requires the support of 50 per cent of affected policyholders by number and 75 per cent by value.

Only those who left Equitable after the House of Lords&#39 judgment in July 2000 and before the effective date of the compromise in February 2002 are eligible. Policyholders who stayed with Equitable signed away their rights to misselling compensation after the first compromise agreement.

Equitable Life chief executive Charles Thomson says the new compromise aims to provide a swift and costeffective alternative to the courts.

Equitable Members&#39 Action Group chairman Paul Braithwaite says: “This report was delayed to save embarrassment for the board and the FSA about the shabby terms of the original compromise agreement. The FSA and Treasury are desperate to keep the society afloat to avoid the spotlight falling on their failures.”

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