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L&G reports new Aviva protection products over legal ‘conflicts’

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Insurers including Legal & General and Royal London are disputing whether Aviva’s new business protection products are allowable within tax rules, Money Marketing can reveal.

Aviva launched two new products on the Aviva Life Protection Solutions platform last month including a “market first” relevant life insurance with the option to add critical illness cover.

Money Marketing understands several rival providers are questioning the critical illness option with L&G confirming it is to raise the issue with HMRC.

An L&G spokeswoman says: “The addition of critical illness conflicts with our current interpretation, and that of the market, of the Government legislation with regard what is allowed within a relevant life plan.

“We are currently re-examining the legislation and will be raising the issue with the HMRC to get further clarity on the situation.”

The spokeswoman adds L&G will add the option if HMRC gives assurances it meets legislative requirements.

Royal London product architect Ian Smart says: “We are looking at this closely to form our own opinion as to whether this is actually possible but have concerns that this could prompt HMRC to think again about whether the legislation around relevant life policies is working as originally intended.”

An Aviva spokeswoman says: “On our Relevant Life launch we have liaised with HMRC and taken legal advice on this from a QC who has confirmed that our product is compliant with the relevant legislation and therefore qualifies as a relevant life plan. We take great care to assess our products before putting them into the market.”

HMRC could not be reached for comment.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. But even their own consultants are saying that it’s only available due to a loophole, and we know how HMRC love to fill in a loophole!! What’s the risk to the client (and the adviser) if it’s closed in future and the client claims?

  2. Come on – it wasn’t that HMRC could not be reached for comment – you just didn’t want to wait in the queue for over two hours listening to a robot……

  3. Sour grapes on behalf of L&G?

  4. L&G should not throw stones in glass houses how noble of them!! I would first look at how the product known as business protection is distributed? In my view the biggest failure is the product governance and distribution. Business protection does not belong in the consumer realms or within a consumer IDD. It’s is in fact a commercial product with both premiums and benefits being paid to and from a business. Business protection should be left with commercial insurance brokers and should have never been allowed to be distributed through consumer channels and standard protection advisors.

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