Many IFAs are telling their Equitable Life policyholders to back the final compromise deal which will prevent the insurer from edging closer to insolvency.
IFAs say the deal represents the best option for most but not all policyholders and will help to keep the company stable. They predict an exodus of policyholders from the company if the deal is agreed.
Under the scheme, guaranteed annuity rate policyholders will give up their guarantees in exchange for a 17.5 per cent increase in policy value.
Non-GAR policyholders get a 2.5 per cent rise but must waive their right to pursue Equitable for misselling.
But Bureaux director Ronnie Lymburn says it will be difficult for GAR holders close to retirement faced with falling annuity rates to give up their valuable guarantees.
He believes non-GAR policyholders also have a tough choice in deciding whether the 2.5 per cent uplift is worth relinquishing their misselling claims.
However, Dennehy Weller managing director Brian Dennehy says it is important that policyholders bite the bullet and vote for the scheme, which FSA managing director John Tiner this week described as a “fair offer”.
Policyholders have until noon on January 11 to cast their vote at a special policyholders meeting being held in Wembley.
Lymburn says: “This is only a solution for Equitable as a corporate body. We could end up where policyholders, rightly or wrongly, will all be disadvantaged again. Equitable say this is the only fair way forward but I would challenge that.”
Wentworth Rose managing director Philip Rose says: “If people vote no out of anger, the net result is that the company going insolvent, which helps no one. There is no happy ending but the compromise does give a route to manage the disaster and keep the company stable.”