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&#39Govt won&#39t rescue Equitable investors&#39

There will be no Government lifeboat to rescue Equitable Life policyholders who have seen the value of their pension pots plummet, says Treasury economic secretary Ruth Kelly.

She concedes that Equitable policyholders have had a terrible time since the troubled life office closed its doors to new business last year but says the Government will not step in to bail them out.

In her opening remarks at a fringe meeting at the Labour conference last week, Kelly said one of the key tenets of the Government&#39s attitude towards financial products is that there is a baseline of compensation if things go wrong.

But when questioned from the floor over whether this baseline will affect the Equitable situation, she said it is unlikely to do so, given that the life office is still solvent.

However, she did point out that if Equitable were to go bust, the Policyholders&#39 Protection Board would come into action, funding 90 per cent of the original value of savers&#39 funds.

The minister said she does not know when the FSA&#39s report into its handling of the Equitable affair will be published, saying she has not seen it yet and will have to discuss the matter first with Lord Penrose, who is holding an inquiry.

Kelly said: “There ought to be safety net in place but to be asking taxpayers and the ind-ustry to bail out Equitable Life at the moment would be a tall order.”

Perspective, p30

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