Equitable Life has ruled out suing the Government for regulatory failures after legal advice that it has no realistic claim.
Law firm Herbert Smith has told the firm it has “no realistic claims against the regulators” and that any claim by policyholders would be “complex, lengthy and costly”.
The Serious Fraud Office is understood to be dropping a plan to prosecute some former Equitable directors and managers for fraudulent trading due to a lack of evidence.
The SFO is understood to be focusing its investigation on the narrower charge of misleading policyholders about the terms of their investments.
Equitable has also confirmed that the Equitable Members' Action Group's resolution – calling for £2m to sue the regulators – will go to a vote at the annual general meeting on May 19.
The company says it believes its best hope for achieving compensation is by persuading Parliamentary Ombudsman Ann Abraham to reopen her investigation.
Chairman Vanni Treves says: “In light of the unequivocal advice of our lawyers, we will not be squandering members' money. If the board had been advised that there was a sustainable and cost-effective legal case, we would have pursued it.
“Rather than throw out the Emag proposals as we could have done, we want members to have their say. The board strongly recommends members to reject Emag's resolutions as they fly in the face of top-class legal advice.”