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AVIVA's MVR ate my profit

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  • jem16
    jem16 Posts: 19,647 Forumite
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    edited 16 April 2011 at 6:04PM
    ellenGB wrote: »
    Hindsight is a wonderful thing. We can only judge on info we have, not info we don't,

    The application of an MVR is not a new thing and something your IFA would/should surely know about and should have explained fully to you. Dunstonh, an IFA, seems very clear why it has been applied. I would have expected your IFA to also know, just as I would also have expected your IFA to know why he recommended it. This would/should all have been detailed to you in his suitability report.
    perhaps because AVIVA changed (from NU) and so did the culture. Same in banking and politics. what was ok in the past may not be now.

    I can't see what it has to do with Aviva - they simply supllied what your IFA organised.

    The questions that need answering is why your IFA chose an investment bond for £15k and used a with-profits fund as opposed to any of the other funds. There may be very valid reasons, the main one being capital protection, but only you and your IFA know all of the circumstances.

    You still haven't actually answered the question - did you ask for capital protection? If you did there seems little wrong with the recommendation if it was for long term.
  • jem16
    jem16 Posts: 19,647 Forumite
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    ellenGB wrote: »
    Your comment is very unhelpful

    Whose comment? People have tried to explain to you but you don't seem to be taking it in.
    and doesn't deal with my issue.

    What issue? That an MVR is being applied?

    Your issue appears to be one of not understanding the product you have.

    As you don't seem interested in answering the question about whether or not you asked for capital protection, I doubt anyone can deal with your issue.
  • darkpool
    darkpool Posts: 1,671 Forumite
    even with capital protection i'd expect some increase in value of an investment over 5 years. OP would have been better of leaving the money in the building society.

    once again it seems the financial services industry makes more from the client's money than the client does.
  • jem16
    jem16 Posts: 19,647 Forumite
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    darkpool wrote: »
    even with capital protection i'd expect some increase in value of an investment over 5 years. OP would have been better of leaving the money in the building society.

    With interest rates so low that may not be the case. The OP says she has got back her capital plus inflation. Building society rates are not keeping up with inflation at the moment.
    once again it seems the financial services industry makes more from the client's money than the client does.

    The product was designed for long term - 5 years isn't long term. With no MVR the fund has done well enough so wait for no MVR.
  • opinions4u
    opinions4u Posts: 19,411 Forumite
    edited 16 April 2011 at 6:24PM
    ellenGB wrote: »
    Your comment is very unhelpful and doesn't deal with my issue.
    Look, we can tell you that the MVR is disgusting and horrible and shouldn't be allowed if you like. But the fact is that it's part of the product you've got and if you withdraw (over 5% of value) this charge is applied. It isn't going to change.

    You can either:

    1) Moan about it to strangers on the internet, but grudgingly accept the reality of it.

    2) Complain to your IFA that his advice at the time of sale was inappropriate. If you indicated that you would be withdrawing regularly it's possible that it was and you should be compensated. If not, at least your IFA will have the opportunity to explain to you why the product was sold at the time and why circumstances have changed that mean while it was suitable 5 years ago it isn't any longer.

    3) Clarify that your IFA's advice was reasonable but Aviva have done something to the product that may open up another avenue of complaint (unlikely, but not impossible).

    4) Appreciate that you were sold the right product but have used it in a different way to the way that your IFA recommended.

    There may be one or two other issues I've not considered. But I'm yet to see an unhelpful reply (although the one quoted below isn't great).
    darkpool wrote: »
    even with capital protection i'd expect some increase in value of an investment over 5 years.
    Even a "Converted mutuals growth fund"? It's been an easy 5 years to lose money.
    OP would have been better of leaving the money in the building society.
    And I would have been better off converting my HBOS shares to cash before Northern Rock crashed. Easy to say after the event.

    once again it seems the financial services industry makes more from the client's money than the client does.
    And if the IFA has misadvised they should be held to account. If the customer has used the product in a way that it wasn't designed for (e.g. regular withdrawals of cash in the first 5-10 years) when the IFA sold it as a long term investment then it's the customer's own decision to pay an MVR.
  • jem16
    jem16 Posts: 19,647 Forumite
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    ellenGB wrote: »
    Th there was nothing in Norwich Union's PF about ten years MVR and the likely amount.

    Are you sure?

    No MVR guarantee

    https://help.aviva.co.uk/faqs/withprofits/uk-life-coms/MVRguarantees

    Page 6 of this guide also mentions an MVR being in place possible longer than 5 years.

    http://www.aviva.co.uk/adviser/product-literature/view-document.cgi?f=gn07060c.pdf
  • jem16
    jem16 Posts: 19,647 Forumite
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    opinions4u wrote: »
    2) Complain to your IFA that his advice at the time of sale was inappropriate. If you indicated that you would be withdrawing regularly it's possible that it was and you should be compensated. If not, at least your IFA will have the opportunity to explain to you why the product was sold at the time and why circumstances have changed that mean while it was suitable 5 years ago it isn't any longer.

    Apparently the MVR would not be applied to regular withdrawals of 5% - the permitted tax-free withdrawals for investment bonds.
    3) Clarify that your IFA's advice was reasonable but Aviva have done something to the product that may open up another avenue of complaint (unlikely, but not impossible).

    Aviva haven't changed it. I have the same bond taken out 5 years ago and it even mentions the MVR in my literature even though I don't have a with-profits fund.
  • darkpool
    darkpool Posts: 1,671 Forumite
    I think this indicates that you do not understand how these products work. If an investor was able to sell his investment for £10 and immediately buy it back for £9 then his gain of £1 represents a loss of £1 spread between all the other investors.

    i think this indicates you don't know how the english language works. If you get a statement that says your investment is worth 10 pounds i think it reasonable to expect you would get 10 pounds if you sold your investment. But life assurers turn round and say "no, we take 10% off your investment because we feel like it"

    again i make the point that the financial services industry seem to make more money from client's money than the client does themselves.

    OP would have been better with an inflation linked product from the post office.
  • jem16
    jem16 Posts: 19,647 Forumite
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    darkpool wrote: »
    OP would have been better with an inflation linked product from the post office.

    The problem is that we don't actually know the OP's circumstances. She mentions taking out a withdrawal of £600 in the first year. The NS&I index-linked certificates wouldn't have allowed that so that would not have been any use had she indicated to the IFA that she wanted an income.

    £15k is low for an investment bond but for all we know this may have been the most suitable product given the OP's ( unknown to us) specific requirements.
  • darkpool
    darkpool Posts: 1,671 Forumite
    opinions4u wrote: »
    And if the IFA has misadvised they should be held to account. If the customer has used the product in a way that it wasn't designed for (e.g. regular withdrawals of cash in the first 5-10 years) when the IFA sold it as a long term investment then it's the customer's own decision to pay an MVR.

    I don't think you can say it's the OP's decision to pay a MVR. It's Aviva's decision to charge a MVR. The FTSE is high, yet they still charge a MVR? It seems to me the insurance companies can make any claim to what the policy is worth, yet charge a MVR to take the policy to the "real" value.

    A client could be getting statements about a policys value for decades, then when it is cashed in they charge a high MVR. Is this right? Would it not be easy for insurance companies to abuse this?

    This is a website devoted to the consumer. Yet people here are defending a practice that in virtually any other industry would be considered a rip off.

    Perhaps people defending MVRs could confirm if they work in the financial industry?
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