The probe will investigate the circumstances leading to the current situation at the society and pinpoint lessons to be learnt from the conduct, administration and regulation of life assurance.
The inquiry will be led by Lord Penrose QC, a lawyer and chartered accountant, and former chairman of the Financial Services Tribunal.
Announcing the investigation, Ruth Kelly, economic secretary to the Treasury, said: ‘The government has considered carefully the concerns of policyholders and representative bodies including the Select Committee of the House of Commons. Equitable Life raises important issues which deserve consideration by a full independent inquiry.’
The inquiry, which is expected to take some time to complete, could look at evidence going back many years, even decades.
Much of the evidence will be heard in private because of confidential and legal reasons, though Lord Penrose will have the option to hear some evidence in public.
Equitable hit the buffers in December 2000 following a Lords ruling on its guaranteed annuity rates. The Financial Services Authority has set up its own investigation into how the authority handled the case, and the conduct of auditor Ernst & Young has been referred to the Joint Disciplinary Scheme.
Equitable Life was taken over by Halifax earlier this year, and is currently negotiating with policyholders over a compromise deal.
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