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Halifax backs Equitable&#39s unit fund

Halifax is standing by Equitable Life unit-linked policyholders following concerns raised by the National Association of Pension Funds that up to £4bn of their funds could be snatched by creditors if the mutual becomes insolvent.

As part of the Halifax deal, the unit-linked funds of Equitable were bought by Halifax in the form of a reinsurance arrangement.

The NAPF raised its concerns following a speech by Equitable chairman Vanni Treves at the NAPF conference that the £4bn of unit-linked policies held by the Halifax could be at risk if the company became insolvent.

Although Equitable said “it is reasonable to assume Halifax would act to protect policyholders”, the NAPF was not satisfied the funds were clearly ringfenced and out of reach from creditors.

IFAs have been keen to have the issue settled. Torquil Clark, for example, has been advising clients to switch from the with-profits fund to the unit-linked fund to avoid further plummeting values while waiting to leave altogether.

Equitable holds the crucial ballot for its compromise scheme to end uncer- tainty over guaranteed annuity rate liabilities this week. If the vote does not go in the scheme&#39s favour, insolvency could be on the cards for Equitable.

Halifax spokesman Mark Hemingway says: “The security of the assets underlying the Equitable Life unit-linked policies purchased by Halifax is not in doubt. The assets and securities backing the unit-linked funds are the property of Halifax and Halifax alone. Unit-linked policy holders&#39 money is not at risk. The Halifax stands behind their investments.”

NAPF spokesman Andy Fleming says: “We have not had an issue with the commitment of Halifax towards the funds but we would have preferred it to have been termed more clearly.”

Profile, p37

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