The Irish Financial Services Regulatory Authority (IFSRA) is to investigate complaints made by a number of Irish people against UK mutual Equitable Life, following a request by the Tánaiste, Ms Harney. Barry O'Halloran reports.
Both the Department of Enterprise Trade and Employment and the Consumers' Association of Ireland (CAI) yesterday confirmed that Ms Harney had referred the issue to IFSRA. The move came after the CAI, and a number of those involved, wrote to her outlining their complaints.
Equitable has between 20,000 and 25,000 members in the Republic. The complaints date back to 1999, the period when its solvency was threatened by a £2.6 billion sterling liability owed to some UK members with guaranteed annuity rate (GAR) policies. In 2000, they won a case in the English House of Lords against the society after it refused to meet the guarantees.
Some Irish members claim that Equitable sold them policies on the basis that their investments would not be affected by the £2.6 billion liability. The mutual told them that their money would be placed in a fund that would be ringfenced from the centrally held assets which it affected.
It subsequently emerged that Irish funds were not ringfenced. CAI director Mr Eddie Hobbs said 800 people who bought Equitable pensions have had their yearly payments cut by 12 per cent. He said some policy holders paid as much as 30 per cent in penalties to cash in their investments, while others were holding on and hoping the situation improved.
The letters to the Tánaiste include one from an ex-employee of Equitable's now-closed Irish office. His letter states that the mutual assured him that the Irish fund was run separately from central funds. On this basis, he bought policies for himself and his family.
Another individual bought an Equitable pension in 1999 for €200,000. Before he completed the deal, he became worried about reports of the court action's likely impact on funds. Equitable wrote and told him it would have no impact on Irish funds. In 2001, it said the worst case facing Irish funds was a 0.5 per cent reduction.
An Equitable spokesman said yesterday that funds were "notionally, but not actually separate" in order to reflect returns on investments different regions. He said it would deal with complaints on a case-by-case basis.
