Duties of the Board in case of companies F2and friendly societies in liquidation
12 Disproportionate benefits under long term policies.
1
If it appears to the Board, in the case of any long term policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation, that the benefits provided for thereunder are or may be excessive in any respect, having regard to the premiums paid or payable and to any other terms of the policy, the Board shall refer the policy to an independent actuary.
2
This subsection applies in any case where an actuary to whom a policy is referred under subsection (1) above makes to the Board a report in writing—
a
stating, with respect to any of the benefits provided for under the policy, that in his view the benefit or benefits in question are excessive; and
b
recommending, accordingly, that for the purposes of sections 10 and 11 above any liability of the company under the policy or any future benefit under the policy should be treated as reduced or (as the case may be) disregarded.
3
In any case to which subsection (2) above applies the Board may determine in the light of any recommendation contained in the actuary’s report that the liability or benefit to which that recommendation relates shall be treated as reduced or disregarded for the purposes of sections 10 and 11 above; and where the Board so determine the liability or benefit in question shall be treated as reduced or (as the case may be) disregarded accordingly for the purposes of the application of section 10, of any provision of subsections (3) to (7) of section 11, or of any provision of any regulations made under subsection (10) of section 11 above (as the case may require) in relation to the policy in question.
4
This subsection applies in any case where—
a
a claim has been admitted in the winding up of a company in respect of any policy which is the subject of a report by an actuary under subsection (2) above; and
b
that report indicates, or the actuary makes to the Board a further report in writing indicating, what value would in his view have been attributed to the policy in the winding up if any future benefit under the policy to which any recommendation in the report under subsection (2) above relates had been treated as reduced or disregarded in accordance with the recommendation in determining the claim in respect of the policy in the winding up.
5
In any case to which subsection (4) above applies the Board may determine in the light of the value indicated in the actuary’s report that the value attributed to the policy in question for the purposes of the claim in respect of the policy in the winding up shall be treated as reduced for the purpose of calculating the sum payable to the policyholder in accordance with subsection (9) of section 11 above; and where the Board so determine the value so attributed to the policy shall be treated as reduced for that purpose accordingly.
6
In this section “future benefit” has the same meaning as in section 11 above.
Words in cross heading preceding s. 5 inserted (prosp.) by Friendly Societies Act 1992 (c. 40), ss. 97, 126(2), Sch. 17 para. 4 (with ss. 7(5), 93(4))