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Aviva sets aside redress for payment blunders

Aviva is set to pay hundreds of millions of pounds in compensation to customers to deal with product underpayments affecting around 800,000 people.

The insurer has been setting aside money since 2007 to compensate individuals.

Aviva says it has already paid out £163m to around 390,000 life insurance policy holders and expects to pay back a further 390,000 customers. Aviva was unable to provide a figure on how much it expects to pay out in total.

Problems are said to have stemmed from the merger of Norwich Union and CGU in 2000.

Following complaints to the Financial Ombudsman Service over policy inconsistencies, an investigation was launched which found wrong income tax rates had been used on pension plans, that there were issues with how pensions had been invested, and that some people had been told the value of their funds would not lose money.

An Aviva spokeswoman says: “We regret that these historical mistakes were made. If any error has been made we will put it right.

“Since 2007 we have strengthened our processes and controls to prevent these types of issues happening again. We are working through any outstanding cases systematically and are making good progress.”

Hudson Green & Associates principal Ian Hudson says: “Everybody makes mistakes but this seems like a systematic issue which is very worrying. These are big sums of money Aviva is setting aside.”

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