The UK's Guardian newspaper revealed on Wednesday that a group of trapped Equitable Life policyholders are planning to sue the firm if compensation is not forthcoming.
Over-payment of bonuses during the 1990's, and a failure to maintain sufficient reserves for the guarantees that it had offered customers left Equitable unable to honour its policy promises following a House of Lords ruling in 2000, which led to near-insolvency.
Policyholders who opted to receive a with-profits annuity are unable to transfer their investment away from Equitable, and have seen their pension values slashed by as much as 40% as a result of the society's financial woes.
According to the Guardian, unless compensation is offered, a group calling themselves the Equitable Life Trapped Annuitants (ELTA) is hoping to issue a writ against the society in July.
Robert Morfee, partner at law firm Clarke Willmott, which will be representing the ELTA, declined to reveal to the newspaper the exact grounds for the intended suit.
However, he suggested that it was likely to centre on claims that Equitable misrepresented the nature of the policies to the annuitants in question, and that it mismanaged the underlying assets in the with-profits fund.
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