Equitable life, the mutual life assurer forced to close to new business in December, is understood to be quietly confident it will escape another potentially devastating legal case to establish whether thousands of policy-holders without guaranteed annuity rates (GARs) were victims of mis-selling.
The society is waiting for a legal opinion on the subject to be delivered to it by Nicholas Warren QC, who was commissioned to investigate the possibility that non-GARs were not warned about the implications of the fact that Equitable had 90,000 customers who did have guaranteed annuities.
Last July, the House of Lords ruled that Equitable had to pay out extra sums to this group which could cost them £2.6bn. The ruling forced Equitable to pay no bonuses to any policy-holders for seven months last year and has strongly hindered its prospects of strong investment returns.
It is believed Mr Warren will tell the society that a relatively small group of policy-holders have a case of mis-selling.
This is likely to be the 29,000 individuals who took out a policy from January last year, when Equitable went to the Court of Appeal to establish whether it had to increase its terminal bonus pay-outs to GARs.
The society had pursued a policy of paying out less in terminal bonuses to GARs who insisted on enforcing the guarantee on their policy, which awarded them annuities about 5 per cent higher than annuities being paid to non-GARs.
Equitable would not say what level of compensation policy-holders since last January would be in line for, but the structure might be to return to them all of the money they have invested in Equitable, plus interest.
This payout would be on top of a separate mis-selling bill of up to £200m which Equitable may have to distribute to policy-holders in income drawn down policies who should possibly have been sold more conventional annuities.
Mr Warren may also say there is a more tenuous case of mis-selling to policy-holders who joined the society after 1994. This was when Equitable started to try to discourage GARs from using the guarantee by paying them smaller terminal bonuses.
Mr Warren is expected to reject the more far-reaching possibility that policy-holders since 1988 have been mis-sold, which is when Equitable stopped selling GAR policies.
One source close to the situation said: "If he went back to 1988 the whole industry would be gravely affected because various companies have reserved for their own GAR liabilities but have not gone back that far. But the mood of Equitable over the last week suggests they don't think he will do this."
Equitable denied they had seen a copy of Mr Warren's report, which will be delivered by the end of the month. But the society stressed that if Mr Warren does identify substantial evidence of mis-selling, it will take it into account when it finalises the compromise scheme, due to be sent to policyholders next month.