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
I contacted Equitable Life some time ago and they advised me that my
father's 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's
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's 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
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
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.