Posted by Andy Smith on 30 December 2000 at 00:35:23:
In Reply to: A-Plan with Equitable Life posted by Phil King on 21 December 2000 at 18:01:14:
Hi Phil,
I don't think that having a GAR is any guarantee at all now. The representative of the GAR holders was interviewed recently on Radio 4's Money Box saying that they do not necessarily wish to hold Equitable to the letter of the ruling. They realise that they may end up killing the goose that laid the golden GAR if a cap is not put on Equitable's liabilities.
Without these liabilities being known it seems that nobody will step in to buy Equitable, and more and more policyholders will jump ship, 10% penalty or not. Pretty soon Equitable will not be able to meet GAR commitments.
All in all a very sorry situation. Equitable may have been naive to sell GARs without making adequate provision, but GAR policy holders were naive to think that their victory in court would be without a down side.
I'd like to know if this sort of situation should have been spotted and avoided by fund managers and trustees. After all, isn't the ability to perform that sort of analysis and discovery what sets them apart from us lay investers?