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Aviva ups compensation over historic Friends Life sales

Business and growth conceptAviva has upped the amount it has set aside in compensation for legacy sales by Friends Provident advisers.

Aviva acquired the firm in 2015. In results released today, Aviva says it has increased the amount in reserve for customer redress in relation to historical advised sales by Friends Provident to £250m, up from £75m last year.

It notes that over 90 per cent of the cases it has identified potential issues with occurred at least before 2002.

In previous results statements, Aviva has said it carried out a review into advice received by some 4,000 customers relating to the transfer of defined benefit pensions into Friends Provident pensions, and had notified the regulator.

In today’s announcement, Aviva adds that while assets under administration on its platform had dipped from £118bn at the end of 2017 to £116bn at the end of last year – a combination of weak investment markets and lower adviser flows amid replatforming disruption – the platform’s new technology should now bring positives for advisers.

The results read: “We encountered disruption during the migration of
our independent financial adviser platform to a new supplier, which adversely affected our service standards. Our teams worked hard to resolve these challenges and advisers are now starting to benefit from the improved functionality and processing capability that the new platform offers.

“Having integrated digital features into our workplace pension propositions, we increased new scheme wins with large corporates and delivered higher net fund flows. This was offset by lower net fund flows into the adviser platform, as migration to a new IT service provider caused disruption for both IFAs and customers…As fee income is linked to assets under administration, this may weigh on operating profit growth in 2019.”

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