Slash and Burn Policy
Aviva (nee Norwich Union) has slashed the payouts on its with-profits (an ironic term, given how useless these products are) endowments and pensions.
Aviva runs several with-profits funds including those sold by; General Accident, Commercial Union, Norwich Union and Provident Mutual.
- A 25 year General Accident mortgage endowment is now down 8.4%
- Aviva Life is now down 12%
- Commercial Union down 7.7%.
Precisely why does the FSA allow life assurance companies to use the phrase "with profits", when it is very clear that they do not do that?
Read more: http://www.dailymail.co.uk/money/article-1201432/Aviva-slashes-payouts-profits-endowments-pensions.html#ixzz0MSDHkBV4
Monday, July 27, 2009
Tuesday, July 21, 2009
Aviva Error
Aviva Error
The Telegraph reports that a computer error by Aviva, has resulted in the miscalculation of Aviva's orphan asset payout to 9,000 policyholders.
One million policy holders were contacted in May, wrt the terms of distribution for Aviva's £1.4BN inherited estate.
Aviva was then forced to send another letter to 9,000 policyholders, to tell them of a "technical error" that resulted in them being offered the wrong amount.
The Telegraph reports that a computer error by Aviva, has resulted in the miscalculation of Aviva's orphan asset payout to 9,000 policyholders.
One million policy holders were contacted in May, wrt the terms of distribution for Aviva's £1.4BN inherited estate.
Aviva was then forced to send another letter to 9,000 policyholders, to tell them of a "technical error" that resulted in them being offered the wrong amount.
Thursday, July 16, 2009
99% Shortfall
99% Shortfall
This Is Money reports that a staggering 99% of endowment policies will fail to pay off the mortgages which they were designed to cover.
With over 4.3M policies still in force this means that millions of people will be affected by the failure of these useless products.
The FSA and the life assurance companies that "manage" these failed products continue to hide behind the excuse that, as they are investments, the consumer knowingly accepted the risk that they might not cover the mortgage.
This excuse is not valid, as the life assurance companies told the hapless consumer that they were designed to pay off their mortgages. Why else would anyone have bought these products if they were not going to fulfil their primary function of paying off a mortgage?
The fact 99% of them will fail to do this is proof that the product was poorly designed, and continues to be atrociously "managed" (eg why do life assurance companies continue to milk the policies of commissions, when they have demonstrably failed?).
The consumer has been ripped off by the life assurance industry, and left to rot by the FSA.
This Is Money reports that a staggering 99% of endowment policies will fail to pay off the mortgages which they were designed to cover.
With over 4.3M policies still in force this means that millions of people will be affected by the failure of these useless products.
The FSA and the life assurance companies that "manage" these failed products continue to hide behind the excuse that, as they are investments, the consumer knowingly accepted the risk that they might not cover the mortgage.
This excuse is not valid, as the life assurance companies told the hapless consumer that they were designed to pay off their mortgages. Why else would anyone have bought these products if they were not going to fulfil their primary function of paying off a mortgage?
The fact 99% of them will fail to do this is proof that the product was poorly designed, and continues to be atrociously "managed" (eg why do life assurance companies continue to milk the policies of commissions, when they have demonstrably failed?).
The consumer has been ripped off by the life assurance industry, and left to rot by the FSA.
Thursday, July 09, 2009
Lautro 19 To Remain "Secret"
Lautro 19 To Remain "Secret"
Any hope of naming and shaming the Lautro 19 is now "dead and buried", according to former IFA Defence Union chief Evan Owen.
The Information Commissioner's office has stated that the High Court has ruled that the information falls under absolute exemption rules under the Freedom of Information Act, and therefore does not have to be disclosed.
The Information Commission ruled in August 2007 that the FSA had to name the mortgage endowment providers which misused Lautro projections in setting premiums, which lead to clients being given unrealistically high maturity figures (cynics might say that they were conned).
The hapless FSA, ever keen to protect the financial services industry from the consumer, appealed against the decision. In October 2008 the Information Tribunal rejected the FSA's appeal.
The FSA then took the appeal to the High Court, which upheld the appeal.
If only the FSA were as zealous when protecting the consumer!
Any hope of naming and shaming the Lautro 19 is now "dead and buried", according to former IFA Defence Union chief Evan Owen.
The Information Commissioner's office has stated that the High Court has ruled that the information falls under absolute exemption rules under the Freedom of Information Act, and therefore does not have to be disclosed.
The Information Commission ruled in August 2007 that the FSA had to name the mortgage endowment providers which misused Lautro projections in setting premiums, which lead to clients being given unrealistically high maturity figures (cynics might say that they were conned).
The hapless FSA, ever keen to protect the financial services industry from the consumer, appealed against the decision. In October 2008 the Information Tribunal rejected the FSA's appeal.
The FSA then took the appeal to the High Court, which upheld the appeal.
If only the FSA were as zealous when protecting the consumer!
Wednesday, July 08, 2009
Tax Investigation Insurance - Taxwise
Professional Cover Against the Threat of Costly TAX & VAT Investigations
What is TAXWISE?
TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute. The Policy has been designed to combat the costs and inequities of undergoing the ever-increasing number of HM Revenue & Customs random investigations.
Taxwise Coverage
The standard cover provides representation costs by registered accounting practices on your behalf, for up to £75,000 in any one claim, arising from:
-Income Tax Self Assessment full enquiries
-Income Tax Self Assessment aspect enquiries (if this option is selected)
-Corporation Tax Self Assessment full enquiries
-Corporation Tax Self Assessment aspect enquiries (if this option is selected)
-H M Revenue & Customs VAT disputes
-Employer compliance disputes PAYE/ P11D/ NIC
-IR35 disputes
-Now covers business's with an annual turnover of up to £10 million
To find out more, please use this link Taxwise
What is TAXWISE?
TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute. The Policy has been designed to combat the costs and inequities of undergoing the ever-increasing number of HM Revenue & Customs random investigations.
Taxwise Coverage
The standard cover provides representation costs by registered accounting practices on your behalf, for up to £75,000 in any one claim, arising from:
-Income Tax Self Assessment full enquiries
-Income Tax Self Assessment aspect enquiries (if this option is selected)
-Corporation Tax Self Assessment full enquiries
-Corporation Tax Self Assessment aspect enquiries (if this option is selected)
-H M Revenue & Customs VAT disputes
-Employer compliance disputes PAYE/ P11D/ NIC
-IR35 disputes
-Now covers business's with an annual turnover of up to £10 million
To find out more, please use this link Taxwise
Wednesday, June 03, 2009
Lost The Plot
Lost The Plot
The FT is suitably scathing about the FSA decision to kowtow to the insurance industry wrt compensation payments for mis-selling endowment policies.
"So FSA has bottled it once again. Faced with pressure from the insurance industry, they have backed away from fully enforcing a ban on using policyholders' money to mis-selling bills.
The decision appeared in document CP 09/09: "Proprietary firms will no longer be able to pay compensation and redress payments from their with-profits funds, where they arise out of events that occur after the rule takes effect. The position in relation to events prior to the effective date will be unchanged."
So any compensation or redress from new mis-selling cannot come from the with profits fund, but for all past misdemeanours they can still raid policyholders' cash.
The Financial Services Consumer Panel describes this as a "backward step" and says that "having uncovered unfairness, the FSA should resolve it".
Predictably, the FSA has allowed intense lobbying from the powerful insurance industry to override consumer fairness. Reading through the comments from respondents in this consultation paper illustrates how many insurance companies are still living in the dark ages.
Some argued that policyholders have no interest or rights in any inherited estate that might exist in with profits funds. Others referred to previous consultation papers without appearing to have noticed that these have been overtaken by clarifications and later statements.
So once again the dinosaurs have outwitted the FSA and consumers will be left to pick up the bill as insurers continue to raid their savings to pay mis-selling bills."
The FT is suitably scathing about the FSA decision to kowtow to the insurance industry wrt compensation payments for mis-selling endowment policies.
"So FSA has bottled it once again. Faced with pressure from the insurance industry, they have backed away from fully enforcing a ban on using policyholders' money to mis-selling bills.
The decision appeared in document CP 09/09: "Proprietary firms will no longer be able to pay compensation and redress payments from their with-profits funds, where they arise out of events that occur after the rule takes effect. The position in relation to events prior to the effective date will be unchanged."
So any compensation or redress from new mis-selling cannot come from the with profits fund, but for all past misdemeanours they can still raid policyholders' cash.
The Financial Services Consumer Panel describes this as a "backward step" and says that "having uncovered unfairness, the FSA should resolve it".
Predictably, the FSA has allowed intense lobbying from the powerful insurance industry to override consumer fairness. Reading through the comments from respondents in this consultation paper illustrates how many insurance companies are still living in the dark ages.
Some argued that policyholders have no interest or rights in any inherited estate that might exist in with profits funds. Others referred to previous consultation papers without appearing to have noticed that these have been overtaken by clarifications and later statements.
So once again the dinosaurs have outwitted the FSA and consumers will be left to pick up the bill as insurers continue to raid their savings to pay mis-selling bills."
Friday, May 15, 2009
Which? Campaign
Which? Campaign
Which? have launched a campaign to lobby the FSA to change its decision re allowing life assurance companies to charge compensation costs for mis-selling endowment policies against inherited estate.
Prudential has taken a staggering £1.6BN from the inherited estate to pay mis-selling costs, while Norwich Union (Aviva) has taken £202M and earmarked another £64M for future claims.
Which? thinks it is outrageous that firms can avoid paying the penalty for their mistakes. The FSA seemed to agree that they should change the rules but have gone back on their original proposals. Now the FSA say that they will only stop firms from charging for mis-selling on policies sold from July this year.
This new rule will be almost meaningless, as hardly any new policies are being sold and firms will be still be able to avoid paying the cost of any new cases that emerge of past mis-selling.
Which? have created template letters which can be completed and sent to MPs and the FSA in less than 2 minutes. They can be accessed via this link Which?
Which? have launched a campaign to lobby the FSA to change its decision re allowing life assurance companies to charge compensation costs for mis-selling endowment policies against inherited estate.
Prudential has taken a staggering £1.6BN from the inherited estate to pay mis-selling costs, while Norwich Union (Aviva) has taken £202M and earmarked another £64M for future claims.
Which? thinks it is outrageous that firms can avoid paying the penalty for their mistakes. The FSA seemed to agree that they should change the rules but have gone back on their original proposals. Now the FSA say that they will only stop firms from charging for mis-selling on policies sold from July this year.
This new rule will be almost meaningless, as hardly any new policies are being sold and firms will be still be able to avoid paying the cost of any new cases that emerge of past mis-selling.
Which? have created template letters which can be completed and sent to MPs and the FSA in less than 2 minutes. They can be accessed via this link Which?
Monday, May 11, 2009
Aviva Halves Offer
Aviva Halves Offer
Aviva (formerly known as Norwich Union) has halved its offer to policyholders for a share of the company's surplus investment funds.
As noted on this site earlier this year, Aviva reneged on last year's offer of £1BN to one million policyholders.
Quote:
"It is a fair bet that any new offer will be lower, and that Norwich Union will seek ways to delay payment to their policyholders."
The policyholders in two with-profits funds are now being offered £500M of the firm's "inherited estate".
How ironic that Aviva took time out during a rapidly falling market to revise its offer. Cynics might argue that the timing was deliberate, thus ensuring that any payout offered would be reduced.
Aviva (formerly known as Norwich Union) has halved its offer to policyholders for a share of the company's surplus investment funds.
As noted on this site earlier this year, Aviva reneged on last year's offer of £1BN to one million policyholders.
Quote:
"It is a fair bet that any new offer will be lower, and that Norwich Union will seek ways to delay payment to their policyholders."
The policyholders in two with-profits funds are now being offered £500M of the firm's "inherited estate".
How ironic that Aviva took time out during a rapidly falling market to revise its offer. Cynics might argue that the timing was deliberate, thus ensuring that any payout offered would be reduced.
Wednesday, April 01, 2009
The Lautro 19
The High Court will take at least a month to decide as to whether to rule in favour of the FSA's appeal to avoid naming the Lautro 19.
The FSA presented new evidence this Monday, which focused on the FSA's argument that confidential information received by the FSA must not be disclosed without consent.
This relates to a Freedom of Information request by IFA Defence Union chairman Evan Owen in January 2005. The Information Commissioner ruled in August 2007 that the FSA had to name the endowment mortgage providers which misused Lautro projections in setting premiums.
The FSA presented new evidence this Monday, which focused on the FSA's argument that confidential information received by the FSA must not be disclosed without consent.
This relates to a Freedom of Information request by IFA Defence Union chairman Evan Owen in January 2005. The Information Commissioner ruled in August 2007 that the FSA had to name the endowment mortgage providers which misused Lautro projections in setting premiums.
Thursday, March 05, 2009
Suckered In
Suckered In
As per The Daily Mirror:
"More than 300,000 homeowners due to clear their mortgage debts this year are facing shameful shortfalls.
And some five million more people will suffer a similar fate in the next few years as a result of monstrous mis-selling of with-profits endowment policies....
Millions of people were suckered into taking out these disastrous policies in the 80s...."
Re being "suckered in", I couldn't agree more!
As per The Daily Mirror:
"More than 300,000 homeowners due to clear their mortgage debts this year are facing shameful shortfalls.
And some five million more people will suffer a similar fate in the next few years as a result of monstrous mis-selling of with-profits endowment policies....
Millions of people were suckered into taking out these disastrous policies in the 80s...."
Re being "suckered in", I couldn't agree more!
Friday, February 27, 2009
FSA Shortchanges Policyholders
FSA Shortchanges Policyholders
The Financial Services Authority has shortchanged endowment policyholders who lodge a complaint for mis-selling against life assurance companies running closed funds.
New rules preventing life companies from using surpluses held in with-profits funds to meet compensation costs will only apply to policies sold after the rules come into force.
Under the FSA's original proposal, the rule change would have applied to all payments made after the regulations came into force, regardless of when the policies were sold or any mis-selling occurred.
The Financial Services Authority has shortchanged endowment policyholders who lodge a complaint for mis-selling against life assurance companies running closed funds.
New rules preventing life companies from using surpluses held in with-profits funds to meet compensation costs will only apply to policies sold after the rules come into force.
Under the FSA's original proposal, the rule change would have applied to all payments made after the regulations came into force, regardless of when the policies were sold or any mis-selling occurred.
Wednesday, February 25, 2009
Prudential Cuts Bonus
Prudential Cuts Bonus
Prudential has cut its annual bonuses by between 6% to 10% on its £65BN with-profits (such an ironic name) fund. Approximately 4.5 million policyholders are now facing cuts, some of which are up to 10%, in their payouts.
The Prudential says that it is acting in the best interests of the fund, and cushioning policyholders against potentially bigger blows.
Surely the purpose of the with profits fund was to smooth the returns in good and bad years, in order to avoid such massive swings?
This cut demonstrates that the concept of "with profits" smoothing has not been properly applied in past years.
Prudential has cut its annual bonuses by between 6% to 10% on its £65BN with-profits (such an ironic name) fund. Approximately 4.5 million policyholders are now facing cuts, some of which are up to 10%, in their payouts.
The Prudential says that it is acting in the best interests of the fund, and cushioning policyholders against potentially bigger blows.
Surely the purpose of the with profits fund was to smooth the returns in good and bad years, in order to avoid such massive swings?
This cut demonstrates that the concept of "with profits" smoothing has not been properly applied in past years.
Friday, February 13, 2009
Scottish Widows Cut Bonuses
Scottish Widows Cut Bonuses
Scottish Widows have cut the bonus rates on their with-profits (such an ironic name for a product that does not actually produce a profit for the hapless policy holder) policies. Scottish Widows claim that the £14BN with-profits fund fell by 17.5% in 2008.
The majority of the 775,000 policies will therefore pay out less than they did last year.
The concept of "with-profits", as told to hapless investors by the life assurance companies, was that the life assurance comapnies would smooth the bonuses during the life of the policy. The fact that companies are having to cut bonuses indicates that this smoothing clearly has not taken place, and the bonus payments in earlier years were too high.
Why would the companies pay out bonuses that were too high in earlier years?
Simple, so that they could attract more investors by showing that their policies were high profit yielding products (some cynics might argue that these policies were a scam).
Scottish Widows have cut the bonus rates on their with-profits (such an ironic name for a product that does not actually produce a profit for the hapless policy holder) policies. Scottish Widows claim that the £14BN with-profits fund fell by 17.5% in 2008.
The majority of the 775,000 policies will therefore pay out less than they did last year.
The concept of "with-profits", as told to hapless investors by the life assurance companies, was that the life assurance comapnies would smooth the bonuses during the life of the policy. The fact that companies are having to cut bonuses indicates that this smoothing clearly has not taken place, and the bonus payments in earlier years were too high.
Why would the companies pay out bonuses that were too high in earlier years?
Simple, so that they could attract more investors by showing that their policies were high profit yielding products (some cynics might argue that these policies were a scam).
Wednesday, February 04, 2009
Norwich Union Renege on Deal
Norwich Union Renege on Deal
Aviva (aka Norwich Union) has announced that it is seeking to restructure its £1BN offer to policyholders for its inherited estate, which was agreed in July 2008.
It is a fair bet that any new offer will be lower, and that Norwich Union will seek ways to delay payment to their policyholders.
In a statement the company said:
"Since we agreed an offer with the policyholder advocate in July 2008, the estate has reduced significantly as a result of substantial reductions in the value of equity and property investments.
Continuing market volatility and uncertainty means that the original reattribution offer for the inherited estate no longer meets our critical test of being fair to both policyholders and shareholders. We are working closely with the policyholder advocate to see how we can restructure our offer.
While we realise this will be disappointing for our eligible policyholders, it does reflect the nature of the current exceptional investment market conditions. We expect to be able to update policyholders in the next few months."
Approximately 700,000 people were to have been offered between £400 and £1,000, and another 220,000 would have been offered a payout of between £1,000 and £3,500 if they accepted.
Who is there left in the UK who trusts in any shape, form or the slightest way the financial services industry in this country?
Aviva (aka Norwich Union) has announced that it is seeking to restructure its £1BN offer to policyholders for its inherited estate, which was agreed in July 2008.
It is a fair bet that any new offer will be lower, and that Norwich Union will seek ways to delay payment to their policyholders.
In a statement the company said:
"Since we agreed an offer with the policyholder advocate in July 2008, the estate has reduced significantly as a result of substantial reductions in the value of equity and property investments.
Continuing market volatility and uncertainty means that the original reattribution offer for the inherited estate no longer meets our critical test of being fair to both policyholders and shareholders. We are working closely with the policyholder advocate to see how we can restructure our offer.
While we realise this will be disappointing for our eligible policyholders, it does reflect the nature of the current exceptional investment market conditions. We expect to be able to update policyholders in the next few months."
Approximately 700,000 people were to have been offered between £400 and £1,000, and another 220,000 would have been offered a payout of between £1,000 and £3,500 if they accepted.
Who is there left in the UK who trusts in any shape, form or the slightest way the financial services industry in this country?
Tuesday, January 20, 2009
L&G Replaces Freshfields
Legal & General (L&G) has completed a review of its external legal advisers, and replaced Freshfields Bruckhaus Deringer with Allen & Overy.
Freshfields advised L&G in 2005, when L&G was investigated by the Financial Services Authority for the alleged mis-selling of endowment mortgages.
Freshfields advised L&G in 2005, when L&G was investigated by the Financial Services Authority for the alleged mis-selling of endowment mortgages.
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