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Equitable savers are told to invest elsewhere
Fri, 30 Sep 2005
Policyholders who invested in Equitable Life are facing £30 million in legal costs. This is as a result of their decision to drop the damages claim against Ernst &Young .

Independent advisers are saying that the failed action should make investors think about moving their savings somewhere else if they have invested in Equitable's with profits fund .

It is estimated that 50,000 people can't move their money as they have converted their pension fund into an annuity. Once this has been done funds can't be transferred to another provider.

Tom McPhail of Hargeaves Lansdown, an independent adviser, said, "We cannot see any convincing arguments to stay with Equitable Life, unless perhaps your policy is nearing maturity and you will be able to withdraw your cash penalty-free in the next couple of years.

"People who were hanging on in the hope of benefiting from a cash injection of some kind have seen that possibility recede with the failure of this action, and I wouldn't counsel anyone to hold on in the hope of government compensation."

Equitable Life's action against Ernst &Young was based on the accountant's alleged failure to inform the board at the time of the severity of their financial problems.

The case was dropped after lawyers said it was possible that the former directors would not have acted in a different way even if Ernst &Young had given the advice.

Vanni Treves, chairman of Equitable Life since 2001, said: "Not to have launched this action would have been a dereliction of our responsibilities to policyholders. We are deeply disappointed that we have been unable to secure redress for them."

Many policyholders lost a lot of money when Equitable almost collapsed in 2000 after miscalculating how much it would have to pay in guarantees on many of its policies.

This has angered many policyholders. Their only hope of redress lies in the negligence claim against 15 former directors. The High Court is due to rule on this matter before the end of the year.

Ann Abraham, the Parliamentary ombudsman, is investigating the Government's role in the Equitable affair. Her findings are due early next year.
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