BOLTON West MP Ruth Kelly has announced she is ordering an independent inquiry into the problems facing life insurance company Equitable Life.

In her first major public decision since being appointed Economic Secretary to the Treasury in June, Ms Kelly has asked Lord Penrose to carry out the inquiry, most of which is expected to be heard in private.

The inquiry will look at the circumstances leading to the current situation, which has left many policyholders facing lower than expected returns, and identify any lessons to be learned for the conduct, administration and regulation of the life assurance business.

"Equitable Life raises important issues which deserve consideration by a full independent inquiry," said Ms Kelly.

"The inquiry will take some time to complete and we want Lord Penrose to start work without unnecessary delay."

As much of the information given to the inquiry is likely to be private and confidential most of the hearing will be in private although the Government says the results of the hearing will be published where possible.

Deciding to hold the public inquiry is just part of Ms Kelly's huge brief at the Treasury, which includes the regulation of banking, financial service and insurance industries, foreign exchange reserves and debt management and the Royal Mint and Office of National Statistics.