Battle over not so friendly levy

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The Independent Online
MEMBERS of the Lancashire & Yorkshire Assurance Society will this week be asked to vote on a rule change that will allow imposition of a pounds 10m levy on its policyholder's funds.

The society said it was forced to make the levy to cover losses on property investments made through its Capital Secure Fund and to meet an extra pounds 2m tax liability.

John Burlton of Croydon, a member of the friendly society, is angry at the way it has handled the AGM at which members will be asked to vote, and is among those planning to vote against the rule amendment.

Mr Burlton said he received notification of the AGM, to be held on 25 May, and a proxy voting form, on 9 May - with the friendly society's annual report and accounts. He said there was a letter enclosed stating that the society would be insolvent if the members did not vote in favour of the change to allow the levy, but he added: 'They did not include a copy of the rule change which we are being asked to vote on.'

Mr Burlton said he requested a copy of the rule change, which arrived on 12 May. 'The change gives them unlimited powers to levy people's funds,' he said. 'They want some now. They could come back and want another nibble. I want to see the unlimited side of the rule change quashed.

'We want more details of their plans for the future. I want to see a new board appointed.'

He added: 'I would like to see the society wound up.'

John Ramsden, the chairman of Lancashire & Yorkshire, said that of the 1,800 proxy voting forms that had been received to date, the overwhelming majority had been in favour of the rule change. The proposal follows a decision in the High Court on the validity of the property investments. Some of the policies allowed investment in property, while some did not. The levy will compensate the policyholders whose policies did not allow such investment. The High Court ruled that it was up to the members of the society to decide whether to allow the levy.

The firm of Eversheds Alexander Tatham, solicitors, has been acting on behalf of many disgruntled investors. Antony Gold, a partner, said he was considering a report prepared by solicitors Taylor & Emmett that examines the events leading up to the property losses.

'The process of looking at that is not yet completed,' Mr Gold said, adding that the report could have some bearing on any decision to attempt a recovery of the lost funds from the society's former management and advisers.

He said there would be no point in taking legal action against someone over the investment mistakes made if they did not have the money to make up the losses.

(Photograph omitted)

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