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Equitable Life (Payments) Act 2010

5.In the 1990s interest rates and inflation made it more expensive for Equitable Life to pay out on its policies that included a guaranteed annuity rate. In order to try and manage these costs, it implemented a policy of offering differential terminal bonus rates. In July 2000 the court ruled that this policy was unlawful (Equitable Life Assurance Society v Hyman [2002] 1 AC 408). Equitable Life ran into financial difficulties when it was unable to meet £1.5 billion in liabilities which the court’s decision established that it owed. In an attempt to secure a fresh injection of capital, Equitable Life put itself up for sale. When no buyer could be found, it announced its closure to new business on 8 December 2000.

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