Halifax set to distance itself from Equitable

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The Independent Online

Halifax, part of the HBOS banking group, is to abandon the joint brand it operates with Equitable Life in a bid to distance itself with the escalating problems of the mutual life assurer.

Halifax, part of the HBOS banking group, is to abandon the joint brand it operates with Equitable Life in a bid to distance itself with the escalating problems of the mutual life assurer.

The bank set up Halifax Equitable when it bought most of Equitable's assets in February for £500m. Halifax Equitable is the new name for the salesforce that came over from Equitable and which Halifax intends to use to boost sales of investment products in 2003 and 2004.

But Equitable has had an even worse year than had been predicted. After closing to new business on 8 December 2000, the society had to slash the total value of policies and hike penalties on those leaving the fund early.

As a result, Halifax is understood to believe that it will not reach sales targets through Halifax Equitable unless it ditches the name and instead uses the salesforce to sell savings and investments under its own banner.

It plans to start selling from next year, after Equitable's policyholders vote on a key compromise scheme on 11 January to cap £1.5bn of liabilities. Halifax hopes that the compromise scheme will be passed so that a lid can be put on Equitable's troubles and it can regain a sounder financial footing. But Halifax faces a tough task as a key group that it hopes to sell other products to are Equitable's remaining 1 million policyholders.

This group are unlikely to take on more investments from a company associated with the society that has taken away a large proportion of the lump sum they expected to receive on retirement.

Halifax would not comment on whether it would ditch the joint brand. A spokesman said: "Our first priority is to see the compromise scheme through. If that happens we will then talk to policyholders about what they want."

Some Equitable directors would like Halifax to buy the with-profit fund, which would have to demutualise and therefore need the backing of policyholders, who may feel they would have a better future as part of the financially strong Halifax than as members of a closed fund with a declining life of up to 40 more years until the last policy matures.

But Halifax is understood to have ruled out buying the with-profit fund, even at a rock-bottom price.

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