'Astonishing' £30m Equitable bill

THE controversial and highly complex rescue scheme aimed at turning around insurer Equitable Life's ailing fortunes will cost policyholders about £30m, chairman Vanni Treves has revealed.

Treves admitted at a meeting of about 200 policyholders at Wembley Conference Centre that this was 'an astonishing amount of money', but said it was 'about what one would expect in a scheme of this kind'. Equitable had already received bills for about £15m and expected that invoices of similar amount were on their way.

Equitable believes the compromise scheme, which involves some policyholders forgoing many of their rights in return for an increase in the value of their policies, will help ensure a stable future for the insurer following the devastating ruling against it in the House of Lords in 2000. Treves' admission prompted a furious outburst from Paul Braithwaite, of the Equitable Members Action Group, who attacked the society over the amount it had spent on a 'purple prose' scheme.

Braithwaite said members were 'aghast' at the plan to pay Equitable chief executive Charles Thomson a £275,000 bonus for 2001, taking his salary to £650,000. He also invited Treves to waive his extra £250,000 payment for 2001. But Treves refused to discuss his pay, saying it was a matter between his firm and the society.

'You have been living beyond our means and wasting our pensions with profligate spending,' Braithwaite said. 'Did the roadshows really need to be so fancy? Did there really need to be four barristers and half a dozen lawyers in the court for us on 26 November?'

But Treves rejected his claims. 'A lot of it (the spending) involves a number of people who in the nature of things charge a lot of money,' he said. 'We are keeping costs under control as best we can. We are not wasting any money on any flash presentations.'

Equitable non- executive director Sir Philip Otton, who is chairman of Equitable's remuneration committee, said whether Treves and Thomson qualified for their bonuses depended on several criteria.

Policyholders at today's meeting voted on the scheme through a private ballot. The deal, which is expected to be supported by the vast majority of members, will also need to be approved by the High Court.