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Who is going to take care of not so little orphan assets?

Whether you believe insurance company orphan assets stand at £20bn or £40bn,it is easy to see why everyone wantsa share of the spoils.

On the higher estimates, orphan assets top the amount Chancellor Gordon Brown is promising to spend to revitalise the health service, transport infrastructureand to shore up the UK&#39s defences.

A group of left-wing MPs have called for a windfall tax. This would simply be punishing thrifty investors and surely goes against the grain of what the Government says it wants to achieve.

The Consumers&#39 Association, having scrutinised Axa&#39s offer, wants a 90/10 policyholder/company split to apply – and many IFAs agree.

Axa wants to offer each policyholder a payment of around £400 which clearly does not add up to such a split. The rest would be retained for long-term investment, which many argue would benefit shareholders but not necessarily policyholders.

It is difficult to blame any insurer for wanting to retain a fighting fund, given the Government&#39s reckless enforcement of the 1 per cent margin on stakeholder. But having decided to set what could become the industry standard, Axa must come up with sound arguments to justify its offer.

IFAs should not accept on face value a deal thrashed out between an insurer and the regulator. As one of the few groups which understands the issue, IFAs are in a unique position to decide if Axa&#39s offer is fair to their clients – the policyholders.

If they decide it is not, they and life offices should steel themselves forsome tough negotiations.

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