Money Helpdesk: Bitter blow for Equitable victims

I HAVE a with-profits policy with Equitable Life, and suffered the reductions in values when policies were cut back after the company ran into trouble. Now I am reading that the compensation I will receive will only be one quarter of my loss. Is that true?

SM, Glasgow

Tom McPhail of Hargreaves Lansdown writes:

The government announced last week that Equitable members who receive compensation will only receive 22.4 per cent of the "relative loss" that they suffered, apart from with-profits annuitants who will receive the full amount.

"Relative loss" is defined as the losses they have suffered compared with what their payouts would have been worth if they had invested in a comparable with-profits fund instead of with Equitable.

In fact it is even worse than that. Not all members will receive any compensation. Around a third are deemed not to have suffered a "relative loss".

This means either they did not make any payments into their policy between 1992 and 2000, or, if they did, they did better than investors in comparable with-profits funds. It tells you something about the with-profits sector generally that some investors in a mismanaged, misregulated company still ended up better off than investors in so-called healthy funds.

It gets worse still. Just over a million policyholders are deemed to have suffered a relative loss. However, 100,000 of these will not receive any compensation, because the amount they received would be less than 10.

The remaining 945,000 policyholders will receive compensation to the tune of 22.4 per cent of their relative loss. Compensation payments will vary from 10 to over 250,000, however more than half of those compensated will receive less than 250.

Which bank to blame for Isa loss?

My problem concerns the transfer of my Isa from HSBC to Santander which took four months to complete. Application was made on 20 September, 2010, transfer confirmed on 18 January, 2011.

Phone calls and visits to both banks, each accusing the other of dragging their feet, prompted me to contact the Financial Ombudsman Service for advice. A letter dated 22 December from HSBC apologised for the delay and confirmed that no request had been received from Santander. Armed with this, I contacted Santander on 31 December intending to cancel the transfer. However, I checked by phone to HSBC to find the latest position and they advised that the transaction had been received on 29 December and completed on 30 December. On 18 January, I received a letter from the Santander Isa transfer team, undated and with no postmark, enclosing a receipt, dated 10 January for the 12,870 transfer.

Who is responsible for the interest difference of 2.25 per cent over this period?

WW by email

Emma Parker of the Financial Ombudsman Service writes:

The guidelines state transfers made on or after 1 January, 2011 should be carried out within 15 business days, rather than the 23 business days allowed for transfers carried out before that date.

In terms of who should pay for the missed interest, it will depend on which bank is responsible for the delays. We have seen a number of complaints where a bank has put an attractive offer in place, but hasn't been able to deal with the volume of people applying. These cases are normally sorted out quickly once they reach us, as the bank does not dispute what has happened - but acknowledges that it took longer to deal with than it should. If consumers aren't sure who is responsible, they should make a complaint to both banks.