Victims of insurance giant Equitable Life get an extra £6,900


Equitable chief executive Chris Wiscarson said: ¿The chairman and I and our executive team have spent nine years piecing off the risks one by one, and the last big one was this one'

Equitable chief executive Chris Wiscarson said: ¿The chairman and I and our executive team have spent nine years piecing off the risks one by one, and the last big one was this one'

Equitable chief executive Chris Wiscarson said: ‘The chairman and I and our executive team have spent nine years piecing off the risks one by one, and the last big one was this one’

Investors in the collapsed insurance giant Equitable Life are in line for bigger payouts after a deal was finally agreed to sell off the firm.

More than 250,000 savers will get thousands of pounds each as the company is shut down after 256 years and its assets absorbed by its rival Reliance Life.

The deal will mean that customers who have invested in ‘with-profits’ funds will get a one-off payment worth an average of £6,900.

Equitable chief executive Chris Wiscarson said: ‘The chairman and I and our executive team have spent nine years piecing off the risks one by one, and the last big one was this one. 

‘I hope policyholders back our proposition.’

It ends 18 years of uncertainty for customers at Equitable, once one of the most trusted names in savings with a pedigree stretching back to 1762.

It ran into difficulties in 2000 after promising investors better returns than could be delivered on its funds and came to the brink of collapse. It was closed to new customers and has been slowly wound down since then.

This left hundreds of thousands of customers facing huge cuts to their retirement incomes, many for policies they had saved into for more than two decades.

Most of the investors with Equitable had ‘with-profits’ policies. 

Hugely popular in the 1990s, these were meant to help investors’ money grow in line with the stock market, aiming to smooth out wild swings in share prices by offering a steady rate of return. 

They did this by holding on to some of the money earned in good times when markets rose and paying this out in bad times when they fell.

But at Equitable, staff miscalculated and did not set aside enough money to pay what was promised to policyholders.

It ends 18 years of uncertainty for customers at Equitable, once one of the most trusted names in savings with a pedigree stretching back to 1762

It ends 18 years of uncertainty for customers at Equitable, once one of the most trusted names in savings with a pedigree stretching back to 1762

It ends 18 years of uncertainty for customers at Equitable, once one of the most trusted names in savings with a pedigree stretching back to 1762

It led to a court case that Equitable lost and the business was left with a massive funding shortfall. As a result, hundreds of thousands of customers have been unable to get the returns promised on their nest eggs.

The Government handed out £1.5billion of compensation to those affected from 2010 to 2015 but this did not make up the shortfall.

Mr Wiscarson was appointed chief executive in 2009 to wind down the business and pay out the remaining assets. This could have taken decades but yesterday the firm announced the deal to sell its assets to Reliance Life.

Policyholders will be asked to vote on the decision next year.

There are around 260,000 with-profits policy holders left and this move will boost the payouts they get. At present, someone cashing in such a policy gets a 35 per cent top-up – so a £10,000 investment would be turned into £13,500.

After the deal, Equitable customers will get top-ups as high 70 per cent, meaning a £10,000 investment would become £17,000.

However, this is still far lower than the returns that were promised.

Reliance will move its head office from Tunbridge Wells in Kent to Equitable¿s site in Aylesbury, Buckinghamshire. Most of Equitable¿s 230 staff will stay on but its board will be disbanded

Reliance will move its head office from Tunbridge Wells in Kent to Equitable¿s site in Aylesbury, Buckinghamshire. Most of Equitable¿s 230 staff will stay on but its board will be disbanded

Reliance will move its head office from Tunbridge Wells in Kent to Equitable’s site in Aylesbury, Buckinghamshire. Most of Equitable’s 230 staff will stay on but its board will be disbanded

Equitable has built up reserves of £1.8billion but restrictive regulations mean that it is not able to pay all of it in case of a sudden market downturn.

The deal to transfer the business to Reliance lifts these restrictions. This money will then be invested in a fund run by Reliance that is linked to the stock market.

Danny Cox, an analyst at the investment firm Hargreaves Lansdown, said: ‘This is a wonderful windfall for Equitable Life policyholders. Investors who can hang on will now see significant enhancements to their policy values.’

Equitable also has around 50,000 policyholders with normal investment funds. They will be transferred straight to Reliance.

Reliance will move its head office from Tunbridge Wells in Kent to Equitable’s site in Aylesbury, Buckinghamshire. Most of Equitable’s 230 staff will stay on but its board will be disbanded.

Quiet boss is owed thanks  

Now that the Equitable Life saga is finally over, chief executive Chris Wiscarson, 67, can perhaps allow himself a moment of quiet pride

Now that the Equitable Life saga is finally over, chief executive Chris Wiscarson, 67, can perhaps allow himself a moment of quiet pride

Now that the Equitable Life saga is finally over, chief executive Chris Wiscarson, 67, can perhaps allow himself a moment of quiet pride

He vowed never to take a bonus while customers were suffering and backs psychological tests for bosses to keep their arrogance in check.

But now that the Equitable Life saga is finally over, chief executive Chris Wiscarson, 67, can perhaps allow himself a moment of quiet pride.

He was preparing for retirement after years at Lloyds when he was parachuted in to run Equitable in 2009.

He was persuaded to take the job by his wife Gilly, who said it would offer a symmetrical end to his career as he had started as an actuarial student with Equitable in the 1970s.

Mrs Wiscarson, a psychologist, also influenced his views on what it takes to make a good chief executive. 

He said in 2012 that bosses should have to take a ‘hubris test’ to check if their behaviour is running out of control.

He has also criticised bosses who take big bonuses in times of austerity, saying ‘they try to defend the indefensible’.

 

 



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