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MP says preserve orphan assets for members

A Labour MP has challenged the Treasury to stop life offices striking deals allowing them to distribute more than 10 per cent of their orphan assets to shareholders.

In a Parliamentary debate this week, Labour MP Barry Gardiner urged Treasury economic secretary Ruth Kelly to work with the FSA to ensure that life office policyholders always receive 90 per cent of the value of orphan assets.

Gardiner said he wanted to avoid a repeat of the Axa Life controversy in December 2000, when the product provider went to the High Court to obtain 45 per cent of the value of its orphan assets for shareholders instead of 10 per cent.

He said he was concerned over rumours that Prudential could make a similar move when it distributes its estimated £5bn-£7bn of orphan assets. Kelly said she welcomed his remarks but told him the issue would be dealt with in the FSA&#39s with-profits review.

Gardiner said: “I want to challenge her to act in concert with the FSA so that similar deals cannot be struck in future – deals whereby the policyholders would be swindled out of their inheritance.”

A Consumers&#39 Association spokesman says: “We are glad to see an MP tackling key issues on orphan assets. We want to stop another Axa occurring and this shows the way forward.”

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