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IFAs reckon policyholders should still switch

IFAs believe that even if Equitable Life policyholders agree to the compromise deal offered last week, policyholders will still face better prospects looking elsewhere.

They say that even if the deal is agreed, it is not thought likely that it will stem the flow of policyholders wanting to leave the fund. Equitable saw £600m leave after it made drastic bonus cuts in July and clients are suffering lengthy delays in transferring funds.

However, many IFAs think that policyholders will vote for the deal in order to receive at least some compensation for their losses before leaving.

IFAs believe although securing the compromise would go some way to remove uncertainty about future liabilities in the fund, Equitable will still face huge financial problems and with limited investment freedom.

The case of with-profits annuitants is still causing concern. They were given a 2.5 per cent uplift as part of the compromise but are still locked in. Equitable is looking at whether these policies can be converted.

Dennehy Weller director Brian Dennehy says: “Those who can get out, particularly those without gars, should already have done so. Anyone who wants a large degree of certainty and decent investment prospects is unlikely to find it within Equitable even if the compromise is accepted.”

Annuity Bureau managing director Peter Quinton says: “In reality there remains a huge number of guarantees within that fund and these will continue to restrict the investment flexibility the fund managers have, and consequently the returns that are achievable.”

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