Representatives of the policyholders with the troubled Equitable Life were last night locked in talks with the life assurer's board over the proposed compromise scheme aimed at stabilising the society and due to be finalised within the next three weeks.
The meeting began in London yesterday afternoon, with some rising at 5am in preparation for what was set to be a heated debate. Paul Braithwaite, chairman of the Equitable Members' Action Group, said it would set a precedent of co-operation between the various action groups and the board.
While there has been regular contact between Vanni Treves, Equitable's chairman, and policyholder representatives, it was the first time they had discussed the forthcoming compromise scheme in a formal setting.
If the various sides find a deal that is accepted by the society's membership by February, Halifax will provide a cash injection of £500m to shore up its dwindling life fund. The mortgage bank bought Equitable's sales force earlier this year.
At issue is whether the society can persuade holders of guaranteed annuities to surrender their guarantees in return for a lump sum. That would letEquitable to cap its liabilities.
The Equitable board's response is that there is no palatable alternative to a compromise scheme. But many policyholders do not see why they should agree to lower pensions to shore up those who did not take out guaranteed policies.
There has been mounting pressure for Equitable to reveal how severely its financial position might worsen if the continuing fall in gilt yields increases the scale of the liability surrounding its guaranteed annuities. Management has repeatedly denied suggestions the firm is on the brink of insolvency.
Ahead of the meeting, Mr Braithwaite said the Government should intervene. "The Treasury should intervene and support the society through the next few years. Why wait until it's a post mortem?"
Mark Field, the Conservative MP for Cities of London and Westminster, said he planned to talk to the Treasury about the Equitable crisis. "There are some deep concerns about the way this has been handled and I think there needs to be a full investigation," he said.Reuse content