View more on these topics

Spottiswoode and Which? slam FSA on orphan funds

Aviva policyholder advocate Clare Spottiswoode and consumer champion Which? have lambasted the FSA for allowing shareholders to raid life companies’ inherited estates to the detriment of policyholders.

The attack on the regulator comes as Aviva and Spottiswoode announce a reattribution deal has been agreed for policyholders.

The FSA allows life companies to use inherited estates to pay misselling fines, shareholder tax and fund new business. After a detailed inquiry last year, the Treasury select committee urged the FSA to change the rules but the regulator has failed to act.

Spottiswoode 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. The FSA is undoubtedly company-focused in its approach rather than policyholder-focused, otherwise it would not have these rules in place.”

Which? claims the FSA “looked the other way” while Aviva “plundered” the estate to the detriment of policyholders.

Chief executive Peter Vicary-Smith says: “Policyholders will be disappointed by the cut in the payout. The FSA’s continual failure to defend policyholders’ interests has cost them a substantial amount of money.

“The FSA effectively looked the other way while Aviva plundered the inherited estate to pay shareholder tax bills, subsidise new business, pay misselling compensation costs.

“Policyholders deserve a regulatory framework based on a clear set of principles which guarantees that all of the inherited estate is used in their best interests. The FSA needs to act now instead of ignoring the criticism of Which? and the Treasury select committee.”


Pada floats lifestyling alternative

The Personal Accounts Delivery Authority has suggested spurning traditional lifestyling methods for personal accounts in favour of ‘target date funds’ which relate to investors’ expected retirement dates, in a consultation launched today.

Aviva reaches with profits agreement

Aviva Investors has come to an agreement over a reattribution offer for its with-profits fund policyholders. The offer promises a minimum payout of £200 for each CGNU and CULAC fund policyholder, with 90% eligible to receive between £200 and £1150. The other 10% will receive higher payouts, Aviva says.This estimate is based on an inherited […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm