January 2012 Progress Report
In May 2010 the Government pledged to “implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”
To honour that pledge the Government established the Equitable Life Payment Scheme (ELPS) and announced in October 2010 as part of the Spending Review that £1.5 billion would be made available to the Scheme for distribution to around 1 million eligible policyholders.
When the Scheme was launched in June 2011 it made the following public commitments:
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To contact all eligible individual policyholders it can by June 2012 to inform them of their status within the Scheme. There are additional complexities in retrieving contact information for members of Group schemes, which will take time to resolve. Therefore, members of Group schemes may not be contacted until after June 2012.
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Start to make payments to holders of With-Profit Annuities by June 2012
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Prioritise payments to estates of deceased policyholders, recognising that contact has to be made with administrators and executors once they have been traced, which could take time.
This report sets out the progress the Scheme has made against those commitments.
Scheme Approach
The establishment of a scheme such as the Equitable Life Payment Scheme represents a significant logistical exercise. The challenges the Scheme needed to overcome before making high volume payments were:
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Designing a system that, as far as possible, did not require policyholders to make a claim for payment
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The integration of policyholder address data with the complex actuarial modelling that established an individual’s Relative Loss.
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Verifying that the policyholder address data was still correct
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Creating the payment systems to ensure that high volumes of payments could safely be made to policyholders.
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Development of appropriate processes and staff training to allow the Scheme to respond to the resultant ‘post-payment’ queries
Following best practice, the Scheme tested its systems thoroughly to ensure that:
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The payment systems established above were robust, and the Scheme had an effective automated method of verifying a policyholder address
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The Scheme could accurately predict the volume and nature of post payment queries and deploy resource to meet this demand appropriately
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The letter and statement setting out an individual’s payment from the Scheme were clear and easy to understand.
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The Scheme was efficient as possible, and offered best value to the taxpayer
This initial period was successfully completed in December 2011. Since then, the Scheme has increased the volume of automated payments being made and many thousands of policyholders are now receiving payment each week.
Prioritisation of payments
The Scheme follows the recommendations set out by Independent Commission on Equitable Life Payments wherever possible. In addition, to ensure high volumes of payments were and continue to be made, the Scheme has started with the less complex cases, such as single policyholders, thus preventing the payment systems being placed under undue initial strain. No delay is anticipated with the remaining cases, and eligible individual policyholders whose address the Scheme can verify will hear from the Scheme as planned. Policyholders may also be interested to learn that there is no additional prioritisation within the Scheme (such as alphabetical order or date when policy was purchased).
The Scheme has also begun the process of contacting the estates of deceased policyholders, and this will continue over the coming months.
The Scheme has begun the process of contacting Group Scheme trustees to facilitate the transfer of policyholder address data, and remains on track to begin payments to Group Scheme members in the second year of the Scheme.
Summary of payments made to date
As of the end of January 2012, the Scheme had made payments to 95,601 individual policyholders totalling £70,749,471. This is approximately 20% of all individual policyholders due a payment from the Scheme. All payments made to date have been to living policyholders.
The figures are broken down as follows:
84,577 non With-Profits Annuitants have received their lump sum payment from the Scheme, totalling £61,444,105
11,024 With-Profits Annuitants have received their first payment from the Scheme, totalling £9,305,366. This is circa 30% of the With-Profits Annuitants due a payment from the Scheme.
Policyholder response
From the evidence of policyholder response so far, the Scheme can report that:
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No difficulties have been experienced in the management of policyholder response, and the Scheme’s website and call centre have remained within its industry standard Service Level Agreements.
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The vast majority of policyholders are cashing their payments within 2 weeks without further recourse to the Scheme.
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On receipt of payment, around 0.1% of policyholders have queried their payment from the Scheme.
Future activity
Over the next 6 months the focus of the Scheme will be on:
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Continuing to make payments to eligible individual policyholders. The Scheme anticipates that the vast majority of individual policyholders due a payment will have received it by summer 2012.
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Completing the first annual payments to all the With-Profits Annuitants it can trace, and also begin to make the subsequent payments to this group.
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Notifying all the eligible individual policyholders it can of their payment status within the Scheme. This will include notifications to eligible individual policyholders that are not due a payment from the Scheme.
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Starting to contact the trustees of Group Schemes to facilitate the processing of payments to Group Scheme policyholders.
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Continuing the process of contacting the estates of deceased policyholders, and making payments to those estates where possible.
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Establishing a claim process for the small proportion of individual policyholders whose address details remain unverified by the Scheme.
Policyholders are reminded that at this stage they need take no action as the Scheme will be writing to all the eligible individual policyholders it can by June 2012. To ensure there is no unnecessary delay in any correspondence from the Scheme, policyholders may wish to contact the Scheme in writing to provide any updated address details. The contact details for the Scheme are here
Further reports
The Scheme is committed to transparency and keeping interested parties informed on the progress it is making. The next progress report is planned for summer 2012, when further figures on the numbers of policyholders contacted by the Scheme and the volume and value of payments made will be published.
In addition to this the Scheme will continue to provide updates to Parliament, and updates to the Scheme’s website as appropriate.
31st January 2012
