07 May 2009
Aviva has now come to an agreement over a reattribution offer
for its with-profits fund policyholders.
The offer promises a minimum payout of £200 for each CGNU and
CULAC fund policyholder. Around 90% will be eligible to receive
between £200 and £1150. The other 10%, says Aviva, will receive
higher payouts. This estimate is based on an inherited estate value
of £1.2 billion. Individuals can choose whether to accept cash or
to continue receiving normal bonuses, which would have no impact on
their investment. Aviva also stated that it will write to the one
million policyholders in the two with-profits funds with details of
the revised offer. The full statement can be found on the AVIVA
webpage here:
Aviva announces restructured reattribution
offer
Clare Spottiswoode, the policyholder advocate, has been in
protracted negotiations with Aviva over the terms. She commented:
"This is good news for policyholders after the turmoil in the
financial markets that affected the plan announced last year. This
offer is also good for the great majority of policyholders under
the FSA's current rules.
"The Aviva proposal shows that together we have found an
imaginative way of keeping the reattribution in place which
includes the opportunity for policyholders to benefit from any
increase in the estates. Policyholders who decide not to accept the
offer and keep their rights to future special distributions are
also protected."
Aviva policyholder advocate Clare Spottiswoode and consumer
champion Which? also criticised the FSA. The FSA allows life
companies to use inherited estates to pay misselling fines,
shareholder tax and fund new business, although we understand this
may change as a result of an inquiry last year by the Treasury
Select Committee.
Spottiswoode says: "We got a good deal for policyholders in the
circumstances but it would have been significantly more if the FSA
had different rules. The regulator allows companies to use
inherited estates to pay for things that they would otherwise have
to fork out for themselves and that just does not seem right.
"This has been going on for years so the estate would have been
much bigger if the FSA had not allowed this activity in the past.
Given the size of this deal, it would have made quite a difference.
The FSA is undoubtedly company-focused in its approach rather than
policyholder-focused, otherwise it would not have these rules in
place."
Which? Chief executive Peter Vicary-Smith said: "Policyholders
will be disappointed by the cut in the payout. The FSA's continual
failure to defend policyholders' interests has cost them a
substantial amount of money.
