While Spottiswoode insists the deal is a top-notch one, the average pay out is now £500 compared to the £1,000 offered back in July, which will inevitably disappoint policyholders.
Yes, the fund value has dropped significantly since last summer – from £2.1bn to £1.4bn – but some critics have slammed Aviva for dragging its feet on the deal which it kicked-off in 2006.
Hargreaves Lansdown points out that had the deal been done 10 years ago the windfalls would have been much more generous.
It adds the drop in payments is disproportionate to the reduction in the fund value, thus favouring shareholders.
Aviva’s share price shot up 11 per cent yesterday to close at 338.5p, so clearly investors were pleased with their end of the deal.
Pensions analyst Laith Khalaf says: “Shareholders are paying less for an asset that has fallen in value, no one can doubt the logic in that.
“But the proportion they are paying seems to have decreased despite the fact that their potential upside is greater given lower market values.”
Other critics have attacked the FSA for being lax in its rules on inherited estate ettiquette, particularly those allowing shareholders to “plunder” orphan funds for their own benefit.
Spottiswoode herself is leading the regulator-bashing, claiming the FSA is “undoubtedly company-focused in its approach rather than policyholder-focused”.
She 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.”
Consumer champion Which? agrees.
Chief executive Peter Vicary-Smith says: “The FSA’s continual failure to defend policyholders’ interests has cost them a substantial amount of money.
“It has effectively looked the other way while Aviva plundered the inherited estate to pay shareholder tax bills, subsidise new business, pay misselling compensation costs.”
What do you think, are clients getting a raw deal?