aviva - reattribution offer

dunstonh

Dunstonh I am amazed but not surprised at your constant attempts to shore up what your industry does.

I'm not an insurer and not in the same business as Aviva. As a company, Aviva has lots of faults and issues (like most large companies). After appearing to improve for a number of years, their service standards have fallen again and I will be critical about them where appropriate. However, there is no point letting people post a complete load of inaccurate rubbish that will potentially scare some readers without some correction.

you have long derived an income from the industry and you naturally don't want to be seen to undermine it,

i dont get an income from the industry. I get an income from my clients and its my clients who i represent.

How many times did you use the word reattribution in your sales advice on With Profits products before Aviva made their play?

Not once. Special bonuses do come around at times but never enough to make them a feature. However, the other reason is that I am not a particular fan of With Profits. I have always preferred unit linked and only have a tiny number of people in With Profits.

I have a large number of diverse financial services products and NONE of them work how they were sold.

I cannot speak for how they were sold. However, chances are that they are working exactly how they should do as a product/investment.

So when I get yet another notice cancelling a promise or worse still attempting to bribe me to give up a promise

The poster was on about the mortgage promise value which has nothing to do with the re attribution and is fully funded. They could pull it but its unlikely. If they did then we could have a go at them then. However, it does currently exist and will continue to exist irrespective of the re attribution. So, telling people that it wont is incorrect and scaremongering.

Today I received yet another obnoxious letter from AVIVA headed "Time's running out -make your choice now!"

Clearly it was drafted and approved by spivs. Who but a spiv would draft a letter of such seriousness with a heading ending in an exclamation mark?

I agree that the quality of much material issued nowadays from many companies is poor. Its dumbed down so much that those are educated and expect better feel that that let down by it. You get the impression that they let Big Brother contestants write it because they expect Big Brother contestants to be reading it. They cant please everyone and like most companies they will never please everyone. Whatever they do, people will be negative.

timple

Reading the Clair S document I read the following

policyholderadvocate.org/the-guide-09#start

1. All insurance companies need to hold significant amounts of capital. 2. With-profits insurance is particularly capital hungry because it offers some guaranteed policy benefits, which are paid irrespective of how well investment markets perform.
3. Because market conditions may well result in policyholders being guaranteed higher benefits than their premiums actually earn, the companies need to hold money in reserve (a ‘capital buffer’) to enable them to meet those guarantees even in times of poor investment performance.
4. Like many other insurance companies, Aviva has accumulated a ‘capital buffer’ as a result of many years of what it saw at the time to be careful management decisions about how much bonus it could afford to pay to policyholders.
5. Capital accumulated in this way is known as an inherited estate. Before the widespread use of computers, companies took decisions that, with the benefit of hindsight, were probably overly careful.

I love that one "without computers they were too careful!"

6. However, recent market conditions show how difficult it is to judge how much capital should be kept.
7. When it is clear that there is more capital in the estate than is needed extra bonuses, known as special distributions, may be added to policies, increasing their value. These special distributions from the estate are paid 90 per cent to policyholders and 10 per cent to shareholders.
8. In a reattribution the company offers to pay current policyholders for their rights to all such future special distributions. Consequently any special distributions that would have been made to those policyholders who accept the offer, will go instead to shareholders.
9. A company does not have to make a reattribution offer, and if it does not policyholders and shareholders would continue to receive any special distributions that are made in the normal 90:10 shares.
10. Policyholders do not have to accept any reattribution offer that is made. If they do not, their policies will go into a special fund with its own share of the inherited estate. Policyholders who do not accept the offer will continue to receive their normal 90 per cent of any special distributions from that fund and shareholders will continue to receive their normal 10 per cent of those special distributions.
11. The reattribution allows the company to gain access to capital that it would not otherwise be able to get. The reattribution needs to represent a sufficiently good deal for Aviva or it would not propose it.
12. In this reattribution the policyholder advocate believes that the offer is in the interests of policyholders. She does so because she estimates that possible special distributions, under the current FSA rules (my highlight), is around £100 million, whereas policyholders are being offered £500 million.

So it is all to do with current FSA rules - for some reason the FSA in its bid to help out large financial institutions whenever possible has allowed them to grab a larger share of the pot, rather than force them to give out to policyholders (which given that most endowment policies are under performing you would have thought would be the logical FSA response).

So the question as to whether to take the money depends somewhat upon whether you think the current FSA rules are going to stay or whether at some point the FSA will actually decide to stand up for the poor consumers of financial products and demand that a higher percentage of the inherited estate is given back to them.

However an important item I did not appreciate is that if Aviva takes the 60% (which is £0.7bn of £1.2bn) they are now proposing they will make the mortgage promise a guarantee which seems like that is worth something. (thanks MiloH for pointing that out - why the heck is that not clearer in the offer document? Do they not want to draw attention to this?)

So if your policy still has a few years to go (mine has 13) then hopefully the poor saps whose policies mature soon will vote yes for it to go through, I then get my promise turned into a guarantee- but I vote No in the hope (albeit remote) that the people who make up the FSA decide to stand up for consumers in the future rather than hoping for a nice lucrative job in the private sector following their stint in the regulators office etc etc ..... (ok it's no chance......)

peterbaker

Aviva are plainly in breach of FSA rules with this. It is totally unreasonable of them to force clents to make a new decision about the contract mid-term and there is indeed a rule that specificly deals with this malevolent intention.

So why are FSA colluding to breach their own rule?

Ian_RP

Hi, I've got an endowment with Aviva with 10 years to run and a shortfall of 2-10 grand. It seems like everyone is taking the re-attribution offer, so I think I should too (£300). The booklet is very confusing and I always am wary of free money.Please Holler out if you think i'm making a huge mistake.
Cheers

Ginwontfixthis

Have been following the thread and thanks for the recommended references. However........can I have thoughts on what way to vote for a CU Wealthmaker policy holder term 45 years annual premium plan end date 2019. Seems from the booklet that as a Policyholder 3 it is not especially clear cut. Have been paying in around £50 pa and have been offered £762

missile

Ginwontfixthis wrote: »

Have been following the thread and thanks for the recommended references. However........can I have thoughts on what way to vote for a CU Wealthmaker policy holder term 45 years annual premium plan end date 2019. Seems from the booklet that as a Policyholder 3 it is not especially clear cut. Have been paying in around £50 pa and have been offered £762

Why are your options any different to everyone else? The info provided by Aviva explains both options and it seems a no brainer to me, but if you think you may benefit from a.n.other payout before 2019, then vote NO.

Ginwontfixthis

Thanks for the feedback. Am blogging virgin as well as confused about the offer wished I'd found you all earlier!

peterbaker

I have to tell you I do not like Aviva. Their values are not those I remember from the old days when Commercial Union with Morley, and Norwich Union or General Accident were pre-eminent in their own right.

I studied a new product from Aviva a few days ago. In it, they have written themselves in a bunch of what looks to me to be new concept smallprint legalese which essentially seems to me to be an attempt to give Aviva the contractual right to change the Ts and Cs when they feel like it with very little subsequent comeback possible down the line from any buyer who signs his life away with the application form.

I do not think much of that type of smallprint exists in the generally older contracts which are the subjects of the 'reattribution' bribes now on offer. When I saw the aforementioned example of some of their new smallprint I instantly thought to myself 'Unfair Contract Terms Act 1977'. If that is barking up a wrong tree then perhaps there is more recent consumer protection law that might apply. Whatever the story, I felt slightly nauseous after I'd read it.

Frankly, I believe that judged by some of their words and notice of intended actions, the present drivers of this company are a disgrace to the UK financial services industry - moreover their recent advertising campaign about the possible merits of a change of name as a prelude to some future greatness did not wash with me - just my twopennorth as a mere customer with a certain level of industry knowledge and memories of how it used to be - any dissenters?

And I have to admit I just do not know what to think about the Policyholder Advocate's role or performance in all this ...

bluffer

dunstonh wrote: »

I have always preferred unit linked and only have a tiny number of people in With Profits.



I cannot speak for how they were sold. However, chances are that they are working exactly how they should do as a product/investment.
.

speaking as a scottish mutual then abbey then resolution then ignis ( I think, but I have lost count of who is currently mismanaging my money ) customer whose unit linked policy has been red for some time and probably will be forever more ( barring a remarkable growth ) unit linked has proved to be just as disastrous as a normal endowment.

bluffer

Back to Aviva, given the rise in the stock market, are we likely to see an increase in the offer?


( dont worry, i wont hold my breath )