What was Equitables first suggested remedy?
To cut costs by reducing bonuses on GARs, arguing that non-GAR policyholders’ bonuses would be cut if GAR bonuses were paid out. However, this would have meant GAR policyholders would have earned lower bonuses than other Equitable policyholders. The Guaranteed Annuity Rate Action Group was made up of policyholders formed in 1998 and took the Equitable to court after it refused to pay these terminal bonuses. A High Court judgement in 1999 backed the Equitables stance. But, the Court of Appeal in January 2000 ruled against Equitable’s proposed solution and in June, the House of Lords ruled that the company must honour the guarantees of income made when the 90,000 customers took out their policies. After losing the court case the Equitable decided to put itself up for sale, in order to get money to rescue the GARs. The Prudential toyed with the idea of buying it but pulled out, claiming it was not in the interests of its shareholders or policyholders. The Halifax has however made a deal t
