Aviva SHP/PPP: insured funds no longer?

engagedandopen

Foreword: I originally put "This thread does not relate to Aviva platform funds that are clearly designated 'Aviva Insured Funds' in their title" but I have looked further and it seems to me these are in scope after all (as at 22/12/22).

Until recently, Aviva's insured funds on both their SHP and G/PPPs were clearly marked as 'External Fund: No' on the factsheet.  But recently, every fund - from the Stakeholder default Mixed Investment 40-85% S2 to my GPPP Flexible Investment S6 to Diversified Assets 1-5 to Blended Portfolios 2-7 - seems to say 'External Funds: Yes'.  And my understanding is that this means there is no longer 100% investment protection on these funds; they are, for all practical purposes, no longer insured.  I used to assume everything by Aviva Life & Pensions (ALAP) rather than Aviva Investors (like their Multi-Manager range) was insured, but it seems this can no longer be assumed.

If I have this wrong, please let me know.  Otherwise, I would have liked Aviva to have written with notification of this fundamental loss of investment protection, even if there's a loophole that means they don't have to do so.

nikal

Well I've just looked at my funds and it has changed from No to Yes as well.

engagedandopen

Thanks for confirming that, nikal.

Albermarle

I am not an expert, but I think you have highlighted a grey area.
In any case AFAIK the 100% insured protection has never been tested in an extreme situation/court of law, so is there really such a thing as 100% guaranteed protection anyway? On paper yes, but in reality......

dunstonh

Foreword: This thread does not relate to Aviva platform funds that are clearly designated 'Aviva Insured Funds' in their title.

As it happens, if you use the insured funds on their platform, you get the full FSCS protection.  

 And my understanding is that this means there is no longer 100% investment protection on these funds; they are, for all practical purposes, no longer insured. 

External and internal normally refers to the fund manager rather than FSCS protection.

There are some that believe that if you use an external fund manager, you get 100% FSCS protection on anything linked to the insurer but only £85k if the external fund house is the failure.   However, as this has never been tested, nobody can be sure.

If I have this wrong, please let me know.  Otherwise, I would have liked Aviva to have written with notification of this fundamental loss of investment protection, even if there's a loophole that means they don't have to do so.

There is no change.

engagedandopen

Thank you for your reply, Dunston.  However, I have looked into it further and I think there is a change.  I also think it applies to the insured funds on their platform after all.

When they used to say, e.g. 'External Fund: No' - 100% FSCS compensation, simple.

Now they say, 'External fund holdings: Yes' (meaning they subcontract to Aviva Investors) - 100% FSCS compensation if ALAP or the Pension Trust (for the platform insured funds) fails.  So far, so good.  But then, the new risk (however slim) that if if Aviva Investors fails, £85,000 limit for the investments they manage.  And I think they ought to have written to inform policyholders about the lower protection.

dunstonh

The problem is that nobody can give an answer that they can be 100% confident in as it has never been tested at the FSCS and probably never well be due to their nature.

The FSCS will not offer an opinion on hypothetical scenarios.  They leave it for firms to best interpret how they will.   And when you read the different interpretations across the providers, it is clear that they have differing opinions.  Some say that the contract has to be insured.  Some say the funds have to be insured.  Some say that only internal funds offered by the insurer get it.  Some say external funds issued by the insurer get it.  Some say the opposite.

If you think they should have notified you of their opinion of what may have changed then you should raise it with them.