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£70 million compensation deal to be announced by Equitable

Date: Mon, 12 May 03 Analysis

LONDON, UK - Equitable Life is set to announce details of a 'sink-fund' to compensate former policyholders for mis-selling, according to today's Times.

The decision by the embattled society that may cost up to £70 million will see 'late joiners' who were sold life insurance policies after 1998 reimbursed.

That is the date at which Equitable recognised it would have difficulty honouring guaranteed returns.

The move follows a Financial Ombudsman Service ruling that Equitable salesman mis-sold policies by assuring customers concerned by negative publicity surrounding guaranteed annuity rates (GARS) that the company only had a limited exposure to such policies.

A review of individual cases is expected to commence next month and will apply to those customers holding policies without GARs, but who left the society before the 2002 compensation deal was agreed.

Equitable closed to new business after a House of Lords judgment at the end of 2000, which forced the company to fulfill its guaranteed rates.

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