§ Mr. David Shaw
To ask the Secretary of State for Trade and Industry what information he has of the practice of life companies using policyholders' funds to acquire shares in a company to benefit the company and not the policyholders; and if he will make a statement.
§ Mr. Redwood
[holding answer 14 January 1991]: Life companies have freedom to invest policyholders' funds for the benefit of the policyholders subject to the prudential regulation of my Department. Policyholders' funds must be applied with the intention of benefiting policyholders although not all investment decisions will turn out to be successful with the benefit of hindsight. The application of policyholders' funds with the intention of benefiting policyholders is a requirement of the Insurance Companies Act 1982 and failure to comply constitutes a criminal offence.