Aviva considers idea of buying orphan clients

Aviva distribution director Angela Seymour-Jackson has said the company would consider paying some IFA firms to pass their orphan clients on to its books, which she defines as those who have not been in contact with an adviser for five years.

New Model Adviser® spoke to Seymour-Jackson after the insurer used the reissue of its terms of business under the Aviva brand to address the issue of orphan or unserviced clients.

The new terms - as revealed on this website on Friday - state an orphan customer is one ‘who at any time after being introduced to us by you or effecting business through your account:
 has requested us to provide financial advice; or
 indicates to us that he or she no longer receives financial advice from you; or
 can no longer receive advice from you due to you no longer holding the required permissions, other relevant regulatory permissions or by reason of this agreement being terminated.’

In the document Aviva said it will also contact clients through generic marketing, raising fears that it could use its new powers to muscle in on adviser clients.

Seymour-Jackson attempted to reassure advisers by explaining the company defined orphan client as a customer who says they have not been contacted by their adviser in any form in the past five years.

When asked whether Aviva would ever adopt a similar system to the firms specialising in acquiring orphan client banks and paying IFAs an amount depending on the value of each client acquired, Seymour-Jackson said this would be an option, although on a limited scale.

‘It’s something we would be prepared to look at in the future, why not?’ she said, adding: ‘If a number of IFAs were interested then why wouldn’t we look at it?’

In theory, taking on responsibility for orphan client banks would help advisers to avoid a regulatory clampdown over the issue of trail commission and ongoing service.

The Financial Services Authority is due to say more on the matter next month in its consultation paper on the retail distribution review.

New Model Adviser® readers were sceptical that such a system would be introduced at Aviva, saying that taking on clients would represent a huge liability for the firm and would not fit in with the firm’s plans to expand its direct sales force.