Aviva looks set to let down around 71,000 of their endowment policy holders this year, as it has cut its bonuses thus "gifting" 70,000 policy holders whose General Accident and Norwich Union policies (both part of Aviva) mature this year with a shortfall.
Showing posts with label Norwich Union. Show all posts
Showing posts with label Norwich Union. Show all posts
Friday, February 24, 2012
Saturday, September 19, 2009
Aviva Policyholders Lose
Aviva Policyholders Lose
The Times reports:
"800,000 policyholders of with-profits funds run by Aviva, Britain’s largest insurer, will share less than half of the billion-pound windfall promised just over 18 months ago.
The investors had been pledged £1 billion in February last year when the funds were valued at £4.2 billion, but were told this March that the payout would be £500 million because falling gilt, bond and property prices had reduced the funds to £1.2 billion.
The High Court yesterday upheld Aviva’s decision to pay the £500 million because the fund had shrunk in value. Aviva will keep £700 million for its own use.
Eligible policyholders — those with Commercial Union Life, CGNU Life and Norwich Union Life with-profits funds — will receive between £200 and £1,150. Aviva said it would put the scheme into effect on October 1, with the majority of payments being made before the end of the year."
Why has the FSA sat on its hands and allowed Aviva to take (Which? uses the word "plunder") £700M of policyholders' money?
Some also argue that Aviva have deliberately dragged this out; so as to not to have to pay out so much money, as the markets continued to fall.
Policyholders, yet again, have been ill served by a life assurance company.
The Times reports:
"800,000 policyholders of with-profits funds run by Aviva, Britain’s largest insurer, will share less than half of the billion-pound windfall promised just over 18 months ago.
The investors had been pledged £1 billion in February last year when the funds were valued at £4.2 billion, but were told this March that the payout would be £500 million because falling gilt, bond and property prices had reduced the funds to £1.2 billion.
The High Court yesterday upheld Aviva’s decision to pay the £500 million because the fund had shrunk in value. Aviva will keep £700 million for its own use.
Eligible policyholders — those with Commercial Union Life, CGNU Life and Norwich Union Life with-profits funds — will receive between £200 and £1,150. Aviva said it would put the scheme into effect on October 1, with the majority of payments being made before the end of the year."
Why has the FSA sat on its hands and allowed Aviva to take (Which? uses the word "plunder") £700M of policyholders' money?
Some also argue that Aviva have deliberately dragged this out; so as to not to have to pay out so much money, as the markets continued to fall.
Policyholders, yet again, have been ill served by a life assurance company.
Monday, July 27, 2009
Slash and Burn Policy
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
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
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.
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, 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?
Monday, January 19, 2009
Norwich Union Cuts Bonuses
Norwich Union Cuts Bonuses
The annual bonus season is upon us again and, unsurprisingly, cuts are in the offing.
Norwich Union has announced a cut in bonus payments on its "with profits" (such an ironic name!) policies. The 2.3 million people who hold a Norwich "with profits" policy suffered a cut of up to 16%.
This means that the majority of Norwich's endowment mortgage customers are likely to face a shortfall when their policy matures.
David Barral, Norwich Union Director, is quoted in the Guardian:
"Our with-profits funds have continued to prove their worth by delivering attractive long-term returns for investors while protecting them from the ups and downs of the stockmarket."
Could someone from the financial services industry care to explain to the millions of hapless "with profits" policy holders why "with profits" smoothing, in poor years, is never applied (as evidenced by the sharp cuts in bonuses); yet in good years it is applied?
Other companies will be announcing their cuts in due course, and it is certain that they will be as bad or worse than Norwich Union.
The annual bonus season is upon us again and, unsurprisingly, cuts are in the offing.
Norwich Union has announced a cut in bonus payments on its "with profits" (such an ironic name!) policies. The 2.3 million people who hold a Norwich "with profits" policy suffered a cut of up to 16%.
This means that the majority of Norwich's endowment mortgage customers are likely to face a shortfall when their policy matures.
David Barral, Norwich Union Director, is quoted in the Guardian:
"Our with-profits funds have continued to prove their worth by delivering attractive long-term returns for investors while protecting them from the ups and downs of the stockmarket."
Could someone from the financial services industry care to explain to the millions of hapless "with profits" policy holders why "with profits" smoothing, in poor years, is never applied (as evidenced by the sharp cuts in bonuses); yet in good years it is applied?
Other companies will be announcing their cuts in due course, and it is certain that they will be as bad or worse than Norwich Union.
Wednesday, January 07, 2009
Bonus Cuts
Bonus Cuts
The Times warns that holders of with profits funds will find that their maturity values will be cut again this year, because of poor performance.
Friends Provident will announce bonuses this week, Norwich Union next week.
Standard Life will declare at the end of this month, with Prudential and Legal & General making their announcements in February.
Many "with profits" (a contradiction in terms) policy holders are of course relying on these policies to pay off their endowment mortgages. A fine example, among many (eg PPI, credit card charges, bank charges, commissions etc), of how the City has ripped off the ordinary British citizen.
The Times warns that holders of with profits funds will find that their maturity values will be cut again this year, because of poor performance.
Friends Provident will announce bonuses this week, Norwich Union next week.
Standard Life will declare at the end of this month, with Prudential and Legal & General making their announcements in February.
Many "with profits" (a contradiction in terms) policy holders are of course relying on these policies to pay off their endowment mortgages. A fine example, among many (eg PPI, credit card charges, bank charges, commissions etc), of how the City has ripped off the ordinary British citizen.
Wednesday, October 29, 2008
Norwich Union Imposes Penalties
Norwich Union Imposes Penalties
Norwich Union has imposed hefty exit penalties on customers' holding with-profits policies.
The market value reductions (MVRs) of between 13%-22% are a heavy blow to the already beleaguered with-profits (hardly an apt name given the ongoing diminution in value of these useless products) policy holders.
The MVRs will apply to about 1.2 million of Norwich Union's 2.4 million holders of with-profits pensions, bonds and endowments.
John Lister, Norwich Union's chief actuary, is quoted in the Times:
"Since the beginning of the year we have seen equity markets, commercial property and corporate bonds fall significantly in value.
MVRs are a mechanism to ensure that those policyholders leaving or wishing to take money out of the fund do not take more than their fair share of the fund at the expense of those policyholders who remain."
All very well but I wonder, if the with-profits funds had been better managed and profits/losses smoothed, whether such a drastic step would have been really necessary.
Norwich Union has imposed hefty exit penalties on customers' holding with-profits policies.
The market value reductions (MVRs) of between 13%-22% are a heavy blow to the already beleaguered with-profits (hardly an apt name given the ongoing diminution in value of these useless products) policy holders.
The MVRs will apply to about 1.2 million of Norwich Union's 2.4 million holders of with-profits pensions, bonds and endowments.
John Lister, Norwich Union's chief actuary, is quoted in the Times:
"Since the beginning of the year we have seen equity markets, commercial property and corporate bonds fall significantly in value.
MVRs are a mechanism to ensure that those policyholders leaving or wishing to take money out of the fund do not take more than their fair share of the fund at the expense of those policyholders who remain."
All very well but I wonder, if the with-profits funds had been better managed and profits/losses smoothed, whether such a drastic step would have been really necessary.
Saturday, September 20, 2008
Adviser Claims Foul by Norwich Union
Adviser Claims Foul by Norwich Union
The FT reports that Dolly Pickering, of Heather, Moor & Edgecomb (an IFA), has claimed that Norwich Union's change in projection calculations has led to an endowment misselling claim being brought against it.
Ms Pickering was informed of a £6K drop in the value of a client's policy, caused by an improvement to the accuracy of estimated maturity value (EMV) calculations.
Ms Pickering stated that it was unfair that IFAs were being punished for selling endowment policies, whose initial projected values were inaccurate, and holds the providers responsible.
The FT reports that Dolly Pickering, of Heather, Moor & Edgecomb (an IFA), has claimed that Norwich Union's change in projection calculations has led to an endowment misselling claim being brought against it.
Ms Pickering was informed of a £6K drop in the value of a client's policy, caused by an improvement to the accuracy of estimated maturity value (EMV) calculations.
Ms Pickering stated that it was unfair that IFAs were being punished for selling endowment policies, whose initial projected values were inaccurate, and holds the providers responsible.
Monday, September 08, 2008
Norwich Union Cut Bonuses
Norwich Union Cut Bonuses
Norwich Union have delivered another blow to the tattered reputation of the life assurance industry, and its much derided and failed product of endowment policies.
Norwich have told their 2.4M with-profits policy fund holders that it will cut policies maturing this year by 11%, in comparison with those that matured last year.
The phrase "with-profits" sounds somewhat hollow does it not?
I wonder why it is that no one has tried to sue the life assurance industry for misrepresenting their product by using that phrase?
The theory of with-profits policies is that they are meant to smooth returns. However, given the ongoing cuts in these policies, that theory appears to be half baked. The life assuring companies have quite clearly mismanaged these policies.
The cuts made by Norwich Union are in line with the fall in the FTSE 100 index over the past 12 months, and that means that the "smoothing" has had no benefit or effect whatsoever.
The changes mean that payouts from Norwich's top-paying mortgage endowment fund dropped by 5%, or £2,144, overnight.
Those who hold these useless, mismanaged polices should take a class action against the life assurance industry for:
-misrepresentation
-mis-selling
-mismanagement
-overcharging
Norwich Union have delivered another blow to the tattered reputation of the life assurance industry, and its much derided and failed product of endowment policies.
Norwich have told their 2.4M with-profits policy fund holders that it will cut policies maturing this year by 11%, in comparison with those that matured last year.
The phrase "with-profits" sounds somewhat hollow does it not?
I wonder why it is that no one has tried to sue the life assurance industry for misrepresenting their product by using that phrase?
The theory of with-profits policies is that they are meant to smooth returns. However, given the ongoing cuts in these policies, that theory appears to be half baked. The life assuring companies have quite clearly mismanaged these policies.
The cuts made by Norwich Union are in line with the fall in the FTSE 100 index over the past 12 months, and that means that the "smoothing" has had no benefit or effect whatsoever.
The changes mean that payouts from Norwich's top-paying mortgage endowment fund dropped by 5%, or £2,144, overnight.
Those who hold these useless, mismanaged polices should take a class action against the life assurance industry for:
-misrepresentation
-mis-selling
-mismanagement
-overcharging
Thursday, July 31, 2008
The £1BN Payoff
The Times reports that long suffering Norwich Union endowment policyholders have been offered £1BN of its with-profits fund.
Aviva, the owner of Norwich Union, will offer about 700,000 policyholders between £400 and £1,000 in exchange for foregoing their right to future bonus payments. A further 220,000 will receive up to about £3,500 and a handful of long-term investors will collect several thousand pounds more.
Clare Spottiswoode, the policyholder advocate, is well pleased and describes the result as a "triple-whammy winner" for the policyholders.
Aviva, the owner of Norwich Union, will offer about 700,000 policyholders between £400 and £1,000 in exchange for foregoing their right to future bonus payments. A further 220,000 will receive up to about £3,500 and a handful of long-term investors will collect several thousand pounds more.
Clare Spottiswoode, the policyholder advocate, is well pleased and describes the result as a "triple-whammy winner" for the policyholders.
Monday, June 30, 2008
Which? Policy Holder Event Epilogue
Which? Policy Holder Event Epilogue
Last week Which? held a policy holder event in Westminster for Norwich Union and Prudential policyholders, the objective being to publicise the Which? campaign for a fair deal for with-profits policyholders.
The day started with a photo-call with "Dick Turpin", where they called on the Financial Services Authority to "stand and deliver" for policyholders.
They were then joined by John McFall MP, the Chairman of the Treasury Select Committee and Derek Wyatt MP, a supporter of the campaign.
After the photos, they went to a meeting in the House of Lords hosted by Lord Joffe, who has been campaigning on this issue since 2000. Vince Cable MP, the Liberal Democrat Shadow Chancellor, expressed support for the campaign and discussed his involvement.
This was followed by a roundtable discussion with Vince Cable MP, Derek Wyatt MP, policyholders, their constituency MPs and Which? policy expert Dominic Lindley.
Which? intend to continue the campaign.
Last week Which? held a policy holder event in Westminster for Norwich Union and Prudential policyholders, the objective being to publicise the Which? campaign for a fair deal for with-profits policyholders.
The day started with a photo-call with "Dick Turpin", where they called on the Financial Services Authority to "stand and deliver" for policyholders.
They were then joined by John McFall MP, the Chairman of the Treasury Select Committee and Derek Wyatt MP, a supporter of the campaign.
After the photos, they went to a meeting in the House of Lords hosted by Lord Joffe, who has been campaigning on this issue since 2000. Vince Cable MP, the Liberal Democrat Shadow Chancellor, expressed support for the campaign and discussed his involvement.
This was followed by a roundtable discussion with Vince Cable MP, Derek Wyatt MP, policyholders, their constituency MPs and Which? policy expert Dominic Lindley.
Which? intend to continue the campaign.
Friday, June 20, 2008
Barmy FSA Regulation
Barmy FSA Regulation
The Treasury Select Committee has published their report based on their inquiry into inherited estates. The Committee is none too complimentary about the Financial Services Authority’s (FSA) regulation of the with-profits industry.
Quote:
"The Committee concludes that the Financial Services Authority (FSA) is not providing a robust enough framework to manage the conflicts of interest inherent in proprietary life funds."
I am hardly surprised, the FSA's "regulation" has been all but non existent.
Chairman of the Committee, the Rt Hon John McFall MP said:
"The approach taken by the FSA towards inherited estates seems a long way from the philosophy of 'principles-based regulation' to which it aspires. Policyholders need to have confidence that their interests are being protected, but the current oversight by the FSA gives no such assurance.
Policyholders deserve a regulatory framework based on a clear set of principles and unambiguous guidance on how inherited estate can be used by life firms’ management."
He refers to FSA regulation as "barmy":
"Shareholder tax is another example of the FSA's barmy regulation in this field."
He then goes on to put a well aimed boot into Prudential:
"I was astonished that the Prudential had taken £1.6 billion from their inherited estate to pay the costs of compensation arising from mis-selling."
Then Norwich Union:
"Tens of thousands of Norwich Union’s longest-standing policyholders do not stand to receive the whole value of the recently announced special distribution. The Committee was not convinced by the argument that such phasing of payments was necessary for the stability of the funds concerned.
In my view, phasing represents an unreasonable barrier for policyholders wishing to exit the fund."
The Committee calls on the FSA to take action in several areas to ensure that policyholders interests are protected, including the following:
It is clear that those with money stuck in these lousy endowment funds have been ill served by the FSA. It really is worth, in my view, considering mounting a class action against the FSA and the life assurance companies for this disgraceful situation.
The Treasury Select Committee has published their report based on their inquiry into inherited estates. The Committee is none too complimentary about the Financial Services Authority’s (FSA) regulation of the with-profits industry.
Quote:
"The Committee concludes that the Financial Services Authority (FSA) is not providing a robust enough framework to manage the conflicts of interest inherent in proprietary life funds."
I am hardly surprised, the FSA's "regulation" has been all but non existent.
Chairman of the Committee, the Rt Hon John McFall MP said:
"The approach taken by the FSA towards inherited estates seems a long way from the philosophy of 'principles-based regulation' to which it aspires. Policyholders need to have confidence that their interests are being protected, but the current oversight by the FSA gives no such assurance.
Policyholders deserve a regulatory framework based on a clear set of principles and unambiguous guidance on how inherited estate can be used by life firms’ management."
He refers to FSA regulation as "barmy":
"Shareholder tax is another example of the FSA's barmy regulation in this field."
He then goes on to put a well aimed boot into Prudential:
"I was astonished that the Prudential had taken £1.6 billion from their inherited estate to pay the costs of compensation arising from mis-selling."
Then Norwich Union:
"Tens of thousands of Norwich Union’s longest-standing policyholders do not stand to receive the whole value of the recently announced special distribution. The Committee was not convinced by the argument that such phasing of payments was necessary for the stability of the funds concerned.
In my view, phasing represents an unreasonable barrier for policyholders wishing to exit the fund."
The Committee calls on the FSA to take action in several areas to ensure that policyholders interests are protected, including the following:
- To ensure that a fair price is offered in a re attribution, not just an adequate price.
- To provide a very strong case about why the phasing of special distribution payouts should be permitted, noting that the FSA has yet to put forward an adequate case.
- To consult on a redesign of the overall regulatory system for with-profits funds during 2008. The Committee said that they are not satisfied that the FSA has done enough to provide a robust framework.
- To consult on the charging of shareholder tax to the inherited estate by the end of 2008, noting that their view is that it should not be permitted.
It is clear that those with money stuck in these lousy endowment funds have been ill served by the FSA. It really is worth, in my view, considering mounting a class action against the FSA and the life assurance companies for this disgraceful situation.
Thursday, June 05, 2008
Reattribution Change
Reattribution Change
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
Monday, April 21, 2008
Norwich Union Deadlock
Norwich Union Deadlock
The negotiations over the fate of the orphan assets of Norwich Union have become deadlocked.
As such the task of freeing up the deadlock has fallen to John McFall, chairman of the Treasury Select Committee.
Norwich Union are refusing to offer policyholders anymore. However, policyholder advocate Clare Spottiswoode is standing firm against the current offer on the table by Norwich Union.
Norwich Union have surplus (orphan) assets of £5BN (aka "inherited estate"). They are using £2.1BN to increase the value of policyholders' assets over the coming 3 years.
However, the dispute centres around what will happen to another £2.7BN.
The argument is focused on whether it is right for Norwich to use the money in ways that do not benefit policyholders, eg instance paying tax or financing growth.
The danger is that Norwich walk away from the negotiations and keep this £2.7BN for themselves.
The negotiations over the fate of the orphan assets of Norwich Union have become deadlocked.
As such the task of freeing up the deadlock has fallen to John McFall, chairman of the Treasury Select Committee.
Norwich Union are refusing to offer policyholders anymore. However, policyholder advocate Clare Spottiswoode is standing firm against the current offer on the table by Norwich Union.
Norwich Union have surplus (orphan) assets of £5BN (aka "inherited estate"). They are using £2.1BN to increase the value of policyholders' assets over the coming 3 years.
However, the dispute centres around what will happen to another £2.7BN.
The argument is focused on whether it is right for Norwich to use the money in ways that do not benefit policyholders, eg instance paying tax or financing growth.
The danger is that Norwich walk away from the negotiations and keep this £2.7BN for themselves.
Monday, March 24, 2008
Fingers in The Pie
Fingers in The Pie
The trouble with some of the life assurance companies that are "managing" this country's useless and underperforming endowment policies, is that they can't seem to distinguish between assets that belong to their hapless and much put upon policy holders and the company's assets.
Normally, this "confusion" over ownership is demonstrated by the excessive and unjustified management charges levied by life assurers against the minuscule returns of the endowment policies that they fail to manage.
However, Norwich Union have found another way to tap the assets of their hapless endowment policy holders. The Times reports that Norwich Union has helped itself to £300M of policyholders' funds, in order to plug a hole in its own pension fund and to pay for its own mis-selling costs.
Some would argue that it is pretty rich of Norwich Union to help themselves in this manner, in fact most people with any concept of ownership and property would argue this. However, Norwich Union is unabashed; safe in the knowledge that it can do this, because it can do this.
If only life were that simple and profitable for its policy holders!
Needless to say this raid on the policyholders' funds will mean lower payouts for 1.1 million policyholders.
Norwich Union has helped itself to £83M of its surplus assets to cover a deficit in its staff pension scheme, with £182M being set aside to pay for endowment and pension mis-selling.
To run that by you again, it is making its policy holders pay for its pension failings and for its mistakes wrt selling endowment policies.
Happy with that?
Vince Cable, the Liberal Democrats’ Treasury spokesman, is quoted in The Times:
"The Financial Services Authority perpetuates rules which give preference to shareholders over policyholders and allow such appalling abuses as penalties for pensions mis-selling to be taken from policyholders' inherited estates. Companies like Norwich Union and Prudential are managing, under the cloak of complexity, to deprive their policyholders of large sums."
Norwich Union is currently involved in "testy" and "bad tempered" negotiations as to how it will split up £5BN of orphan assets (inherited estate). Needless to say, Norwich Union wants to take as much of that money for themselves as they can, they believe that their shareholders outrank their policyholders.
The fact that these orphan assets arise as a direct results of the policyholders' contributions, and not from anything that the shareholders have done, is irrelevant to Norwich Union.
Why are they treating their policyholders with such contempt?
Simple, because they can!
They know that their policyholders lack the legal and vocal clout of their shareholders.
It is high time that the policyholders gave companies such as Norwich Union a very bloody nose, a class action should be initiated by the policyholders of Norwich Union and the life assurance companies given a lesson not to treat their policyholders with such contempt.
The trouble with some of the life assurance companies that are "managing" this country's useless and underperforming endowment policies, is that they can't seem to distinguish between assets that belong to their hapless and much put upon policy holders and the company's assets.
Normally, this "confusion" over ownership is demonstrated by the excessive and unjustified management charges levied by life assurers against the minuscule returns of the endowment policies that they fail to manage.
However, Norwich Union have found another way to tap the assets of their hapless endowment policy holders. The Times reports that Norwich Union has helped itself to £300M of policyholders' funds, in order to plug a hole in its own pension fund and to pay for its own mis-selling costs.
Some would argue that it is pretty rich of Norwich Union to help themselves in this manner, in fact most people with any concept of ownership and property would argue this. However, Norwich Union is unabashed; safe in the knowledge that it can do this, because it can do this.
If only life were that simple and profitable for its policy holders!
Needless to say this raid on the policyholders' funds will mean lower payouts for 1.1 million policyholders.
Norwich Union has helped itself to £83M of its surplus assets to cover a deficit in its staff pension scheme, with £182M being set aside to pay for endowment and pension mis-selling.
To run that by you again, it is making its policy holders pay for its pension failings and for its mistakes wrt selling endowment policies.
Happy with that?
Vince Cable, the Liberal Democrats’ Treasury spokesman, is quoted in The Times:
"The Financial Services Authority perpetuates rules which give preference to shareholders over policyholders and allow such appalling abuses as penalties for pensions mis-selling to be taken from policyholders' inherited estates. Companies like Norwich Union and Prudential are managing, under the cloak of complexity, to deprive their policyholders of large sums."
Norwich Union is currently involved in "testy" and "bad tempered" negotiations as to how it will split up £5BN of orphan assets (inherited estate). Needless to say, Norwich Union wants to take as much of that money for themselves as they can, they believe that their shareholders outrank their policyholders.
The fact that these orphan assets arise as a direct results of the policyholders' contributions, and not from anything that the shareholders have done, is irrelevant to Norwich Union.
Why are they treating their policyholders with such contempt?
Simple, because they can!
They know that their policyholders lack the legal and vocal clout of their shareholders.
It is high time that the policyholders gave companies such as Norwich Union a very bloody nose, a class action should be initiated by the policyholders of Norwich Union and the life assurance companies given a lesson not to treat their policyholders with such contempt.
Wednesday, March 05, 2008
Sir Nicholas Montagu
Sir Nicholas Montagu
Liberal Democrat Treasury spokesman, Vince Cable, has questioned the impartiality, effectiveness and independence of the Norwich Union With-Profits Committee (set up to protect the interests of policyholders).
He is concerned about Norwich Union's plans to distribute a proportion of its inherited estate to policyholders over three years, as opposed to a one off lump sum payment.
Mr Cable wrote to Sir Nicholas Montagu, chairman of the committee, questioning the committee's role in allowing the special bonus to be phased over three years.
Quote:
"Your committee has been established to protect the interests of policyholders and yet in your first public act you seem to have destroyed any prospect of being seen as a credible champion for them."
Montagu, a former civil servant who presided over the Inland Revenue during a period of bungles and who now gives after-dinner speeches for £5K a time, is seemingly reluctant to answer questions from "This Is Money" about this decision.
However, Montagu is paid from policyholders' funds to safeguard their interests therefore he is obliged to answer questions from policyholders.
Policyholders should send their complaints, comments and any queries relating to his role to:
Sir Nicholas Montagu,
Norwich Union With-Profits Committee,
Norwich Union Life,
2 Rougier Street,
York
YO90 1UU.
With-profits committees, if they are to really serve the policyholders that they claim to represent, need to be independent, impartial and effective.
It would appear that some fall short of this.
Liberal Democrat Treasury spokesman, Vince Cable, has questioned the impartiality, effectiveness and independence of the Norwich Union With-Profits Committee (set up to protect the interests of policyholders).
He is concerned about Norwich Union's plans to distribute a proportion of its inherited estate to policyholders over three years, as opposed to a one off lump sum payment.
Mr Cable wrote to Sir Nicholas Montagu, chairman of the committee, questioning the committee's role in allowing the special bonus to be phased over three years.
Quote:
"Your committee has been established to protect the interests of policyholders and yet in your first public act you seem to have destroyed any prospect of being seen as a credible champion for them."
Montagu, a former civil servant who presided over the Inland Revenue during a period of bungles and who now gives after-dinner speeches for £5K a time, is seemingly reluctant to answer questions from "This Is Money" about this decision.
However, Montagu is paid from policyholders' funds to safeguard their interests therefore he is obliged to answer questions from policyholders.
Policyholders should send their complaints, comments and any queries relating to his role to:
Sir Nicholas Montagu,
Norwich Union With-Profits Committee,
Norwich Union Life,
2 Rougier Street,
York
YO90 1UU.
With-profits committees, if they are to really serve the policyholders that they claim to represent, need to be independent, impartial and effective.
It would appear that some fall short of this.
Monday, March 03, 2008
Call For Evidence
Call For Evidence
In a move designed to ensure that another endowment related scandal does not occur, the Treasury Select Committee has called for written evidence as part of its inquiry into the orphan assets (Inherited Estate) held by life companies' with-profits endowment funds.
The call comes as concerns are raised over the actions of AXA, Prudential and Norwich Union as they attempt to re attribute their Inherited Estates.
These assets are worth billions of pounds yet, despite these funds being contributed by policyholders, some insurance companies have been using a portion of them for the benefit of their shareholders rather than policyholders.
In 2000 AXA paid out a paltry 31% of its inherited estate to policyholders, this gave rise to the FSA to creating the post of Policyholder Advocate.
Claire Spottiswoode, Policy Advocate, is currently acting on behalf of Norwich Union policyholders.
Ms Spottiswoode, who is not happy with the current plans by Norwich Union (eg to pay the policyholders their share over 3 years), has welcomed the call for evidence:
"Foremost among the issues will be the way in which the FSA allows companies to subsidise the writing of new business, which has the effect in a re attribution of transferring value from the estate directly to shareholders.
Further, the way in which the FSA allows companies to pay shareholder tax from the estate is costly to policyholders and requires explanation."
The committee would like to hear about the following areas:
In a move designed to ensure that another endowment related scandal does not occur, the Treasury Select Committee has called for written evidence as part of its inquiry into the orphan assets (Inherited Estate) held by life companies' with-profits endowment funds.
The call comes as concerns are raised over the actions of AXA, Prudential and Norwich Union as they attempt to re attribute their Inherited Estates.
These assets are worth billions of pounds yet, despite these funds being contributed by policyholders, some insurance companies have been using a portion of them for the benefit of their shareholders rather than policyholders.
In 2000 AXA paid out a paltry 31% of its inherited estate to policyholders, this gave rise to the FSA to creating the post of Policyholder Advocate.
Claire Spottiswoode, Policy Advocate, is currently acting on behalf of Norwich Union policyholders.
Ms Spottiswoode, who is not happy with the current plans by Norwich Union (eg to pay the policyholders their share over 3 years), has welcomed the call for evidence:
"Foremost among the issues will be the way in which the FSA allows companies to subsidise the writing of new business, which has the effect in a re attribution of transferring value from the estate directly to shareholders.
Further, the way in which the FSA allows companies to pay shareholder tax from the estate is costly to policyholders and requires explanation."
The committee would like to hear about the following areas:
- The regulatory definition of the inherited estate in a with-profits fund.
- The extent to which life assurance companies should be permitted to diminish inherited estate in order to subsidise corporate activity, including financing new business, making strategic investments, paying shareholder tax and paying the costs of compensation for mis-selling.
- Whether allowing life assurance companies to use inherited estate to subsidise corporate activity has any adverse effects on competition.
- The principles that should guide the division of inherited estates in 90:10 funds between policyholders and shareholders upon re attribution of the estate.
- The appropriate sharing of inherited estate between current and future policyholders.
- Whether policyholders' reasonable expectations of distributions from inherited estate should be zero or have a positive value.
- Whether any distribution of benefits from the inherited estate should be made in a single payment or phased over several years.
- The role and responsibilities of the Policyholder Advocate.
- The framework for negotiation between the Policyholder Advocate and the life assurance companies.
- The role of the with-profits committees of life assurance companies.
- The approach of the Financial Services Authority to the issue of inherited estate.
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