Aviva policyholder advocate Clare Spottiswoode started her first business importing cottons and silks from Thailand with £32 lent by her father.
Within three months, she made a fifteen-fold return, which enabled her to pay back her father with interest and have enough money to get her through the remainder of the academic year at Clare College, Cambridge, in the 1970s.
Spottiswoode says she thrives on a challenge and likes to be in jobs that have never existed before.
Norwich Union parent company Aviva has been looking into the reattribution of the inherited estate on two of its with-profits funds for about 10 years.
Aviva stresses that no formal decision has been taken to go ahead with a reattribution but Spottiswoode says it would be “embarrassing” for the life office to back out now.
The inherited estate of Aviva’s two main with-profits funds, CGNU Life and Culac, is estimated at £4.2bn. Of this, £1.2bn will need to be kept back to meet capital margins which would leave around £3bn to be reattributed as windfalls for policyholders.
But the figures are more complex than this and Spottiswoode says her office will not be getting any numbers from Aviva until March.
“I very much want to be the first to do this, partly because we are new to the industry and can look at it with a fresh eye. It is very difficult to disentangle the history because these inherited estates have been used for all sorts of things so we are trying to work out which bit of money belongs where.”
Her consultation with the 1.1 million eligible policyholders is due to end in February and in the spring she will start negotiations with Aviva. Any payouts will not be announced until at least early 2008.
Spottiswoode has a wealth of experience which ranges from having been appointed by then Trade and Industry Secretary Michael Heseltine to head Ofgas, working as a senior economic assistant at the Treasury, setting up and running her own computer software business and doing a brief stint at Azurix, which was the international water division of Enron.
She is keen to stress that she left Azurix in 1999, well before the collapse of Enron. She admits her reasons for leaving were because she was concerned about the financial stability of the company but says she had no idea at the time that this problem extended to Enron as a whole.
But it was at Ofgas in 1993 that Spottiswoode found her desired job mix of economics, government policy, regulation and freedom to make decisions, despite telling the headhunters all the reasons why she was wrong for the job. “I rang them up and said you are not looking for someone like me, you are looking for a big businessman who is about to be retired and who has got a reputation in industry.”
But Michael Heseltine was so impressed that she made it on to the short list and was offered the position.
Spottiswoode thrived in the role, with the main objective to introduce competition to the gas industry. She and her team achieved a world first for traditional utilities by accomplishing the separation of distribution from supply.
“It has been a hugely successful model that has been copied round Europe and other parts of the world in utility companies. I used to have a rule that said if you introduce competition, cost will go down to about a third of what it was before. And that has happened. It is a very powerful mechanism.”
The Ofgas job was similar in many ways to the Aviva role, in Spottiswoode’s opinion, because she is starting from scratch and looking at what is right and fair for policyholders. “The reason this role is so interesting is because there has never before been anyone whose role is to look into policyholders’ interests directly, it has always been indirectly. There has never been anyone positively acting on behalf of the policyholder saying: ‘Is this really fair and could you do better for them?'”
Spottiswoode says the Axa situation in 2001 is the reason the FSA now requires life offices to appoint a policyholder advocate if they are planning to reattribute their with-profits’ inherited estate.
Axa distributed its £1.7bn inherited estate in 2001, resulting in over 500 disgruntled policyholders represented by the Consumers’ Association taking Axa to court over its proposals to distribute £250m on the 90/10 principle of £225m to eligible policyholders and £25m to shareholders.
Policyholders claimed the average cash windfall of £400 was not enough and were unhappy that Axa would retain £1.45bn in the with-profits fund.
The CA lost the High Court cast in November 2000 and Axa went ahead wit its distribution.
Spottiswoode says lessons have been learnt since then. “Axa was not able to carry out a thorough investigation like we are, so it really did not have enough time or money to make a real impact. I think that did embarrass Axa and its good reputation. It got a lot of flak which I think harmed it.”
Having had four children does not seem to have slowed Spottiswoode’s career and she holds five non-executive positions, which include deputy chairman of British Energy, on top of her Aviva post.
In her spare time, she likes to go to the opera and theatre and enjoys “chilling out” in her second home in Suffolk at weekends.
Born: March 20, 1953
Lives: Islington during the week and Suffolk at weekends
Education: Cheltenham Ladies College 1964-71; MA in maths and economics, Clare College, Cambridge, 1972-75; MPhil in economics, Yale University 1975-77
Career: February 2006 to date, policyholder advocate for Aviva; 2001 to date, deputy chairman of British Energy; 1998-99, senior vice-president of Azurix; 1993-98, director-general of Ofgas; 1989-91, tutor at London School of Business; 1984-90, chairman and chief executive of Sapphire Spottiswoode; 1980-83, sole proprietor of Spottiswoode Trading; 1977-80: senior economic assistant at HM Treasury
Likes: Opera and theatre, having the contrast of living in London during the week and then going to the countryside at weekends
Dislikes: Untrustworthy people
Drives: BMW 5 Series estate
Favourite film: Dr Zhivago
Favourite book: Alan Clark Diaries
Favourite music: Mozart operas especially Cosi Fan Tutti
Heroes: Former director-general of Oftel Sir Bryan Carsberg
Career ambitions: “Looking at business in different ways with a fresh perspective. I like to be contrarian.”
If I weren’t in this job I would be… In the commercial sector doing something which involves regulation.