UK - Local government pension schemes are set to mount a legal challenge to Equitable Life over the potential of misselling of AVC products.
The National Information Forum (NIF), which is open to all local authority schemes, is angry that Equitable may have known of forthcoming trouble and failed to warn the scheme in time despite continuing to pitch for new business.
In order to protect members’ interests, the NIF has decided to canvas support so it would be able to take legal action.
NIF chairman and West Midlands Metropolitan Authorities Pension Fund chief pensions officer Mike Woodall said: “The concerns that members of the NIF have are that the company appeared to be sacrificing with-profits policyholders to balance up the GAR liabilities and that they seem to have been selling with-profit policies without telling anyone about these potential liabilities.
“We have written to all LGPS administrating authorities to see if they would contribute to a fund that would enable us to take legal counsel as to whether there were grounds to take [legal] action and, if the answer to that was yes, then to commencing such action.”
The NIF has received 10 positive responses so far and expects to get a significant amount of support as LGPS managers feel that they should take all possible actions in order to protect scheme members interests.
The National Association of Pension Funds (NAPF) said it had had discussions with Equitable but said that it was not considering legal action against the firm itself.
The Association of British Insurers (ABI) said news reports that insurance firms were prepared to fight any proposal to assist in bailing out the beleaguered insurer were premature. An ABI spokeswoman said: “The industry bail-out scheme under the Policyholder’s Protection Act only comes into play if a company becomes insolvent or goes into liquidation and there is no hint of that happening at Equitable. It is in everyone’s interests to try to concentrate more on getting this compromise sorted out.”
By Jonathan Stapleton
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