Corporate report

Equitable Life Payment Scheme: January 2013 progress report

Published 31 January 2013

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

In the Coalition Agreement published in May 2010, the government pledged to “implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”

To honour that pledge the government announced in October 2010 as part of the Spending Review that £1.5 billion would be made available to the scheme for distribution to around 1 million eligible policyholders, and passed the Equitable Life (Payments) Act to establish the scheme.

The scheme started making payments in June 2011, and this is the third progress report that the scheme has published.

1. Summary of payments made to date

In the progress report published in July 2012 the scheme reported that around 288,000 policyholders had received payments totalling £277milion. Since then the scheme has continued to make significant progress and as of 31 January 2013, the scheme has made payments totalling £535m to 370,867 policyholders. The figures are broken down as follows:

• 339,794 individual non With-Profits Annuitants have been issued their lump sum payment from the scheme, totalling £426m.
• 30,997 With-Profits Annuitants have received their first payment from the scheme, totalling £54m. Additionally 2nd year payments totalling £46m have also been made to annuitants.
• Payments to 76 group schemes have been made totalling £9m.

2. Remaining individual policyholders

The scheme has now informed nearly 80% of all eligible individual policyholders of the value of any payment due. Payments to all the individual policyholders that the scheme can trace are on track to be completed by April 2013 as planned.

In the last report the scheme stated that it had written to some policyholders and informed them they would have further contact from the scheme by April 2013. Since that report, the scheme has made payment to many of these policyholders and a small number still remain to be contacted again. The scheme remains on track to contact the remaining group by April 2013.

The scheme has also written to the last known address supplied by the Prudential or Equitable Life of all overseas policyholders to request confirmation of their address before making payment. Eligible policyholders living overseas who have not heard from the scheme are recommended to contact the scheme directly on +44 141 232 1377 to learn about the address verification process.

Despite extensive electronic tracing efforts (such as checking records against the Electoral Roll, and credit histories) and also writing to policyholders at the last known address supplied by Equitable Life or the Prudential, some eligible individual policyholders will remain untraced. As payments to individual policyholders are ongoing, the scheme will provide further detail on the volume of untraced individual policyholders in its next progress report.

Any individual policyholders who believe themselves to be eligible and have not heard from the scheme by April 2013 should contact the scheme directly on 0300 0200 150 where they will be advised of the next steps they should take. The scheme has also established a ‘Policychecker’ service through which a policyholder can check the eligibility status of a policy. This service can be accessed on 0300 0200 150. The scheme will also conduct a publicity campaign later this year to encourage those who have not been traced to contact the scheme directly so the process of making any payment due to them can begin.

3. Company or Group schemes

As stated when the scheme launched, there are additional complexities in retrieving the contact details of those policyholders who bought their policy through a group (i.e. Company) scheme, because Equitable Life does not hold contact details for many of these policyholders.

To address this issue, over the past months the scheme has been contacting group scheme trustees to obtain policyholder contact details, and the scheme has written to all the 5,700 eligible company schemes to begin this process. As a result of this work payments to some 500,000 policyholders will accelerate from April 2013.

4. Deceased policyholders

The scheme can confirm that 5,760 payments worth £9m have been made to the estates of deceased policyholders. The process of identifying, tracing and contacting the estates of deceased policyholders continues, and will continue over the coming months. The executors of an eligible policyholder’s estate who have not heard from the scheme, can help the scheme with this process by contacting the scheme directly in writing.

5. Policyholder response

All payments to policyholders are accompanied by supporting documentation that sets out their payment in broad terms. From the evidence of policyholder responses so far, the scheme can report that:

• vast majority of policyholders are cashing their payments within 2 weeks of receipt without further recourse to the scheme
• 0.8% of eligible policyholders have complained to the scheme. Additionally the Independent Review Panel has been hearing cases to assist policyholders who are dissatisfied with how the scheme has handled their complaint.

6. Future activity

Over the coming quarter the focus of the scheme will be on:

• completing payments to the remaining eligible individual policyholders
• making payments to the eligible individual policyholders who identify themselves to the scheme
• making payments to those policyholders who bought their policy through a group or company scheme
• continuing the process of contacting the estates of deceased policyholders, and making payments to those estates as appropriate
• planning the process of scheme closedown so that the scheme can be closed as planned in 2014

7. Further reports

The scheme is committed to keeping interested parties informed on the progress it is making. In particular as the scheme begins the process of moving towards closing down in 2014, it is important that the scheme keeps interested parties and policyholders up to date on the associated closedown deadlines. Therefore the scheme will now publish quarterly progress reports during 2013. The next report will be published in early May and will cover the scheme’s progress in February – April this year.