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Just in time to beat penalty

As an IFA, I was involved last year in helping my father in obtaining

compensation from Equitable Life for being advised to transfer his

occupational pension scheme with BOC back in 1987 to an Equitable Life

personal pension.

I contacted Equitable Life some time ago and they advised me that my

father&#39s plan would, in fact, not fall within the pension misselling

review. However, the PIA instructed them to carry out a review.

It was deemed that £40,000 compensation should be paid to my father&#39s

personal pension plan to ensure that sufficient money would be available to

provide the pension that he would have at least received from his BOC

scheme at retirement at aged 55.

A compensation payment was finally made to the plan in November last year.

However, it was, of course, a great worry to see Equitable Life cut

terminal bonuses last week, which would have meant my father&#39s contract

would have been reduced in value by £28,000 in view of the Equitable

Life adviser, in his wisdom, recommending that all the money be invested in

the with-profits fund.

This effectively reduced the compensation payment by about £12,000,

meaning that despite the fact that my father had received compensation on

one hand from Equitable Life they had taken it away on the other by

applying the cut to terminal bonuses. This is likely to apply to most other


Fortunately, in this case, I recommended, in view of my father having just

taken early retirement, that he move to a drawdown arrangement with

Standard Life and, a very fortunate 48 hours before,I had forwarded the

policy document to Equitable Life together with a letter explaining my

father&#39s intentions.

I did, of course, have no idea that they intended to cut terminal bonuses

at this point. However, they decided to allow my father 14 days to provide

relevant documentation from Standard Life and further forms signed by

himself and they would allow this transfer to take place without applying

the penalty.

I am sure you will agree that the whole compensation process is, in fact,

pointless when the insurance company concerned has the ability to cut

bonuses and effectively wipe out any potential compensation paid.

Adam Rowbottom




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