Dear Standard Life and Co-operative Insurance (CIS) Policyholders
I say that the Co-operative Insurance Society and Standard Life have been paying unsustainable commissions on low charging pension policies. Other with-profit providers may also be paying unsustainable commissions. In one case, Standard Life was paying 22% of the annual premium on a policy that had an annual fee of 0.8%. The Co-Op are paying up to 27 times the amount taken in the annual fee. My argument is that the Equitable Life authority prevents these payments as they amount to an unlawful differential bonus. The Co-op justify this practice by stating the pension fund is expected to 'grow rapidly over time as a result of the payment of additional contributions and the investment return earned on those contributions' (paragraph 43 of the attached witness statement) I see a parallel here with lending to sub-prime borrowers on the basis that the property market was always going to rise so any borrower in difficulty could sell without taking a loss, this approach has come unstuck. The Co-op and other insurers have been betting that rises in the stock market would cover the losses made on selling pensions, but of course the stock market has been performing poorly for years. Previously commissions would be funded by making a far higher charge than 1% of the first year's premium. The Co-op say my claim 'is very likely the claim will exceed £5000.'
I have an additional complaint against the Co-op which is that they are wrong to stop annual bonuses on personal pensions because of the guaranteed annuity rates some of the these policies have. The courts have so far ruled that the Co-op can end paying annual bonuses on personal pensions. This appears to undermine the Equitable Life case which said final bonuses had to be paid irrespective of guaranteed annuity rates. Personal pension policyholders who chose to transfer their business elsewhere before retirement appear to be taking a loss. By paying unsustainable sales commissions the Co-op have weakened their ability to pay annual bonuses.
During the litigation it has come out that neither Standard or the Co-op keep profit and loss or balance sheet accounts for the sub-funds that make up their multi-billion with profit funds. In January 2008 I lost the hearing against the CIS at Central London County Court before District Judge Lightman which is attached. I have read the judgment and cannot find anywhere where it says the differential bonus argument deserves to fail. Paragraph 34 of the judgment allows the Co-op to end annual bonuses on pensions because 'it does not matter much difference one way or the other whether annual bonuses are paid as an annual bonus or it is left to the final bonus'. I was granted permission to appeal against the judgment and lost the appeal before His Honour Judge Knight on 24th February 2009. I am seeking leave to appeal at the Court of Appeal.
My claim against Standard Life was transferred from Ilford County Court to the High Court in December 2008. In February 2009 the High Court stayed the claim saying it would be wrong to let the claim proceed because Standard's cost of defending my claim would be "enormous" and my claim would be less than a £100 (I have two small policies with Standard). I will be appealing against this decision as it seems to allow to large corporations to take unlawfully deduct monies from thousands of people and remain unchallenged in the courts. If other policyholders submit either an adjourned claim of write to the financial ombudsman it will be helpful to me. I only advise claiming at court if you have a legal expenses policy which often comes as part of building and/or contents policy. Should you wish to investigate making an adjourned claim against Standard Life, I suggest you print off the particulars of claim and send it to your insurance company and ask if they are prepared to lodge it for you with a request that the claim is adjourned pending the result of the High Court case, Walker v Standard Life reference number HQ09X00126. If your insurers do decide to submit a claim in the small claims court, it would be helpful if you could let me know. Alternatively, you could submit a complaint to the Financial Services Ombudsman and ask for it to be adjourned pending the result of my claim.
For the avoidance of doubt, please do not spend any money on obtaining legal advice on this matter. While I remain confident that I have a reasonable prospect of success, I do not wish anyone to spend money on this claim in case the courts rule against me. To submit a claim an adjourned claim Co-op or submit an adjourned compliant at the Financial Services Ombudsman, please contact me and I will provide you with further information. If you want to register your support please become my facebook friend.
Yours sincerely
Andy Walker
Downloads:
Archive:
Update 3 - April 2009