'Latecomers' threat to Equitable

TROUBLED insurer Equitable Life may be in line for a bill for tens of millions of pounds in extra compensation for 'late joiners', threatening to strain its already weak solvency, sources say.

The Financial Ombudsman Service (FOS) is believed to be close to a decision over cases relating to around 1,500 people who signed up for Equitable policies after September 1998.

By that time, the insurer's former board had received legal counsel over the possible seriousness of its financial woes.

The customers in question left before February 2002 when the new board pushed through a compromise plan.

Equitable last year lost five cases with the FOS, but submitted further evidence which has been under consideration.

The FOS said: 'We will be issuing a final decision as soon as possible for the benefit of all concerned. We can see light at the end of the tunnel.'

Equitable refused to comment. The mutual has already set aside £75m to meet possible claims from late joiners, but an adverse ruling could mean that it has to pay substantially more. It cannot appeal, but could seek a judicial review if it believes FOS's processes were flawed.

Paul Weir, of the Equitable Late Contributors Action Group, said: 'My complaint seems to be dragging on for ever. Equitable took more than £11,000 of my capital by false pretences. We want our money back, not a token handout.'