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ASA’s decision to ban Aviva advert does not help consumers

The Advertising Standards Agency has done consumers no favours whatsoever by coming down against Aviva on a complaint over one of its annuity TV adverts.

It seems it is fine for fruit companies to say you will live longer if you eat pomegranates or for credit card companies to suggest you too could be driving a speed boat around the Med. But an image of Paul Whitehouse as a pensioner clipping his hedge while saying he got “nigh on 20 per cent more income” from his pension by going to Aviva is unacceptable.

I do not often get emotional at the suffering of life insurers but it is hard not to feel sorry for Aviva on this occasion.

Anyone working in the industry will be baffled that the ASA decided Aviva was not able to persuade it of the validity of its claim. I have just been on the FSA’s website and the difference between the best and worst rates on offer among those which do the decent thing and publish their rates is 18 per cent.

I struggle to see how a single consumer can have suffered detriment at having seen this advert. If it prompted consumers to go and talk to Aviva, all well and good. If their rate then proved to be worse, the consumer will have gone elsewhere. Those that already understand the baffling concept of the open market option or the marginally less confusing shopping around for an annuity are hardly likely to not then bother on the basis of an advert like this.

Aviva seems to have come unstuck on the way the message can be interpreted. The insurer’s “we may pay you more” message has been rejected on the grounds that not enough people can get such an uplift beyond the rest of the market.

When I see a Ryanair advert telling me I can get to Stock-holm for a penny, I understand that this is the best possible deal out there, not that I am guar-anteed to get it.

We all know that what is important is that consumers understand they can get more than their pension provider is offering by shopping around. We also know that some will get up to 20 per cent more by doing so. But the ASA seems to require Aviva to be offering 20 per cent more than open market providers for it to be able to make such a claim.

With two-thirds of annuitants not exercising the open market option, for most consumers, “more” is a question of existing provider v the rest of the market, not more than the best of the rest.

Part of Aviva’s problem is it was not able to produce sufficient evidence about how much or little, non-open market providers were offering. The ASA did not accept the insurer’s argument that those not publishing their rates were necessarily worse than open market providers, which seems naïve.

Perhaps more surprising, given the many hours of energy that certain corners of the industry have put into demonstrating the benefits of the open market option, Aviva was not able to get its hands on data to demonstrate non-open market providers’ rates.

That does not get the ASA off the hook. We know telling consumers they can get more by shopping around does not work. Consumers need clear, simple messages and the ASA’s decision in this case will only serve to make providers water those messages down.

The reality is Aviva’s claim that it can get you up to 20 per cent more is absolutely true. It is telling that the ASA case was brought on the basis of just four complaints. I wonder how many of them work for competitors?

John Greenwood is editor of Corporate Adviser


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There are 13 comments at the moment, we would love to hear your opinion too.

  1. I went to a department store sale today as they had advertised up to 70% off. Not everything was 70% off. It is slightly misleading but I would have thought people would be used to this.

  2. I went on a web site for my car insurance, and i didn’t save £150 on my car insurance that they said I might do either!!

    to point out the fact that consumers COULD get a much better deal is surely a good thing to promote, particularly if they are a smoking, obese, man with a severe heart condition, rather than doing nothing at all and taking the first quote through the door

    I agree with Mr Greenwood – who were those 4 sad individuals?

    I wonder how many complaints Aviva will get for their current (hard hitting but very effective) life cover campaign???

  3. I imagine you only get a job at the ASA if your no good in the competitive real world of advertising or not even good enough for a Health and Safety role somewhere – much the same as a tax inspector – if you aren’t any good as an accountant or IFA . Hey ho even the words – Advertising Standards is a contradiction in terms!

  4. It’s not at all misleading. Up to 70% off means you won’t get more than 70%.

    No amount of regulation, ASA, FSA et al can protect someone from their own stupidity.

  5. Were the companies that refused to provide their rates also the ones that complained? I think we should be told.

  6. Protect the consumer at all costs all four of them. We in the annuity industry want to encourage the best practice of using their O.M.O option and yet we have no way way of telling them the “potential” upsides to encourage them to put aside their inertia and call providers.
    Where is the customers who need that motivation T.C.F when they loose out 1000’s who loose out are taken into account.

  7. I could not agree more with all of the comments above.

    It is so frustrating that when a provider has manged to create such a catchy advert which could lead to benefits for the majority of retirees that the ASA has taken such a short-sighted view!

    Hopefully Aviva will not be discouraged and they will have another stab, preferably with Paul Whitehouse, at another annuity advert.

  8. Instead of the FSCS blowing the remainder of this year’s budget on TV adverts perhaps this cash could be directed to the FSA educating the consumer and then advertising the OMO. Somehow I don’t think it would happen, it would have too much of an immediate positive impact for the consumer.

  9. Customers should know more about omo’s and Aviva are doing a good job of letting people know of the availability. Too many people approaching retirement simply just accept the terms from the pension provider and the section on the retirement pack for an OMO is right at the back tucked away and out of site!

  10. Norwich Union is constantly near the top of the annuity market so this ruling should not do their reputation too much harm.
    If it puts the OMO in the spotlight this a plus point. But how do people get to benefit from the OMO? Option one is to go to an adviser. Option two is to use the internet comparison sites – that point you at an adviser. Option three is to ring around – but who knows which insurance companies a) do annuities and b) are likely to be competitive?
    So if you do not wish to use an adviser, and many people do not, the OMO option becomes a little spurious. I have never tried the method of ringing many insurance companies for a quote method, but I did help one client go through the direct route. I can confirm that it was quite off putting, and unlikely to be undertaken a second time. By co-incidence the provider on that occasion was Aviva.
    Whilst the OMO is important, the current process needs a radical overhaul, especially for the lower end of the market. Having to pay for a compulsory information extraction session, and a compulsory incomprehensible report as a consequence, it is hardly an enticing prospect with a fund of £30k or £40k. For client or adviser, under the new super regulated and therefore anti-forest processes.
    The consumer really pays for current “not for value” regulation, either in the advice cost or in the exclusion from comparative information in the direct market.

  11. I agree with Glen that regulation can be a real turn-ff for those with average fund values.

    However there are many broking organisations who specialise in providing a painless, cost efficient service for those who wish to get the best from the market but who do not need a holistic process.

    Often retirees can arrange such services through their employers or occupational schemes, who already have an established relationship with a specialist organisation. If this route is available then the costs can be further decreased.

    For annuities, the key is to ensure that people understand the options that are available to them and can speak to somebody who is help the retiree to be confident that they have the best possible income for their situation.

    Cut down the forms, make pensions simple to understand and ensure that important points such as (Aviva’s) can reach the masses.

  12. Blatant lies and obviously misleading statements need to be excluded from advertising.

    But the ASA is just another quango throwing its weight around, making ridiculously subjective edicts which, in many cases including the Aviva pronouncement, are actually harmful to the public.

    Party political broadcasts are only a form of advertising and they are filled to the brim with lies, false statistics and promises which every person over the age of 5 knows will be broken. The ASA should ban all party political broadcasts.

  13. Having been on the “FSA” site – CfeB? – the author will of course have noted that Aviva are NOT one of the ones who “do the decent thing” and publish their rates.

    It is the CfeB site that prevents the providers publishing, btw – if the range of rates a customer can get from that provider falls outside of a tolerance (c. +/-2% v. published rate, from memory) – then the CfeB replace the provider rate with the meaningless blurb you see on the site.

    But hey. Don’t let facts get in the way of a good rant.

    Nor, it must be said – a good point.

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