Court orders Axa to pay legal fees

Axa, the French insurance giant, has been forced to pay the legal costs for its own policyholders to contest in the High Court its plan to distribute £1.7bn of surplus orphan assets.

Axa, the French insurance giant, has been forced to pay the legal costs for its own policyholders to contest in the High Court its plan to distribute £1.7bn of surplus orphan assets.

The High Court yesterday ruled Axa must pay £100,000 for legal representation for policyholders, who oppose proposals by the insurer to pay out significant funds to shareholders as well as to policyholders.

The Consumers' Association, which is leading the campaign against the insurer, hailed the costs ruling as a victory and said it could now arrange for one Axa customer, Stuart Macwirter, to be represented at the High Court hearing on 18 December as a test case.

The association is opposing Axa's orphan assets plan because it says the pay-outs leave 70 per cent of the surplus for shareholders, going against Treasury proposals that any such split should be 90 per cent in favour of policyholders. The association said more than 1,400 Axa policyholders have contacted it for help. Axa, which had previously refused to pay the costs, said yesterday it was happy with the decision.

At the December hearing Axa will put forward its plan to pay on average £400 to each policyholder in return for them surrendering any claim on the assets. Mr Wood warned that if the association succeeded in defeating the plan, no payments would be made. "We do not believe it would be prudent to take more money out of the fund."

Orphan assets are reserves held in life insurance funds, made up of unclaimed life policies and surplus profits on lapsed policies. UK insurers are estimated to have around £20bn in orphan asset cash that has accumulated over decades.