Members are to vote at a special meeting, scheduled for 22 December, on the proposed demutualisation of the insurer which would lead to it being sold to Lloyds TSB for pounds 6.7bn. If successful, an average of pounds 5,600 would be paid in compensation to with-profits policyholders.
What has emerged this week, however, is that thousands of people who have invested with Scottish Widows this year will be treated unequally in the event of a windfall.
Policyholders have all received a circular setting out terms and conditions for payouts. Every member who opened a with-profits policy before 22 June, the day before Lloyds TSB made its offer, will receive fixed compensation of pounds 500. There will be a further, variable payment for 900,000 investors who took out a policy before 31 December 1998.
The amount of variable compensation will depend on policy values and duration of membership. Estimates suggest that people investing pounds 100 would receive an extra pounds 76 for a policy started in 1998, pounds 5,300 for the same plan set up in 1988 and pounds 76,500 for one dating back to 1970. The proposed demutualisation is unanimously endorsed by the board.
Scottish Widows refused to disclose the number of new customers who invested in the first half of the year and so are ineligible for the extra money. But the figure will run into thousands. Last December's cut-off date has been criticised by some investors as arbitrary and chosen only for ease of administration.
While a company spokesman denied this, the amount of variable compensation will be calculated as a percentage of the reversionary bonus, and this bonus is declared at the end of every year. Administratively, therefore, it is easier to determine payouts if 31 December is the last day for eligibility.
Ultimately, new investors will benefit from the higher profits expected as a result of demutualisation - an argument put forward by Scottish Widows as justifying its decision not to include these members in the qualification for variable compensation.