With profits review: FSA upbraids Aviva for lengthy reattribution process

Is this the same FSA who whilst stating that Advisors review With Profits they themselves are inconclusive about the merits of 'Zombie' funds.

Perhaps they are now saying that the PPFM 'for consumers/policyholders' are as unintelligible as the PPFM, as they are written by and for actuaries. Sounds to me like a good reason to review with profits in itself for any client.

We can also call these funds "With Loses"

Scottish Life Talisman account - I have a single premium investment that is 10 years old showing no gain and to move it would result in a 7% MVA. This is a poor investment that is almost impossible to get out of. 18 months ago the MVA was 35% - I queried this and got the usual lengthy actuarial garb that says lots of actuarial stuff and is not plain English. Totally agree these are Zombie funds.

Result

At last the FSA seem to support the fact that With-profits has had its day. . !

So the FSA is ordering greater governance. This is obviously because policy holders care about transparency, well a few maybe. The UK financial services industry has done nothing but suffer at the hands of regulation and as a result so have consumers. Think about it, back in the 80s and 90s did anyone care about the 'transparency' of with profits funds? Simple answer is no! because the returns were generally very good. So now we are in low inflationary times and investment returns generally reflect this, we need transparency and the reduction in return the cost of transparency creates.

I still like With Profits and still recommend it when it is right for the client, however, due to regulatory fund management, it is more difficult to get a fund that will do the job as well as they used to.

The FSA stance seems totally confrontational with regards to all of the easy targets in our industry and appears to not want to work with the industry for everyones benefit.

Please let fund managers manage funds in a way that is most beneficial to consumers.

I agree with Charles Rickards.

Also wonder about comparing closed funds to healthy current open fully operational funds.

I also remember clearly the FSAs pressure on healthy businesses which operated with profit funds to close their funds and effectively seal their fate. With profits must have new business coming in to share overheads and be succesful, as business matures etc it is how they work.

Not to mention worse examples such as Equitable Life forced to sell equity in a low market.

Open with profit funds which are supported with new business and arent just labelled open are outperforming their unitised counterparts, the whole with profit comparison to unitised is not bad considering the heap of vulture funds being picked over for profit by those that bought them.

I wonder who the regulator will pick on in the morning, how many is it so far this week?

3 criticisms and it is only Tuesday.

Bunch of losers, God only knows where they scraped these people up from.

"I wonder who the regulator will pick on in the morning, how many is it so far this week?"

My money is on Fabio Capello feeling the wrath of the regulator's spokesman.

However they should really be taking a long hard look at themselves, or maybe they already are. There does seem to be something of a competition among FSA managers to get their names out raising their profiles by being quoted having reviewed something or other after the event. Perhaps they fear that someone might be having a "review" of the regulator itself before long, and so they're trying to justify their existence.

A colleague sent an email round this week warning that Aviva are reportedly refusing to honour the tenth anniversary 'MVA free window' on elements of a clients fund that are accrued from reattribution or special bonuses.

If any of you chaps or chapesses have clients who you were planning to move out of Aviva's dismal WP funds on the tenth anniversary, you may wish to check this.

Civil Servants criticise private sector co. for long winded bureaucratic process-shock horror.

Pot and Kettle!

As an ex-employee of Prudential, I would suggest that these uninitiated staff of the FSA look into the long standing and excellent track records of the largest With Profit funds (Prudential, L&G etc.) and compare returns for our clients with collectives over the last 40 years.

As for Aviva taking 4 years to complete its' reattribution, it has taken the FSA 13 years to think about regulating the banks - I suggest maybe a fine of £100 billion to reduce the country's deficit !!!!

The Cavalry to the rescue of poor clients. (Heaven help them - the FSA doesn't)

WP has been a scandal for years. Standard Life quoting terminal bonuses and then taking them away at the next year’s valuation. A TERMINAL bonus should only be declared at the END of a contract.

NPI & Scottish Mutual – NIL bonuses for years. Funny how the vulture funds acquire WP business and then make them WIITHOUT profits (for the policyholder, but plenty of profits for them) WHY are the names not disclosed? FSA Kremlin tactics again. This is in the public interest. Could it be because their old mucker John Tiner’s firm is one of the culprits? Old Regulators have got to stick together, after all. Turner made a good stab at the AGM making excuses for not being on the ball – “it takes years to establish what works”. If so why did you have the endowment review before the policies had matured? It's the same reasoning. But I guess as ever its one law for them and another for us.

I see many are complaining about AVIVA. Why are you all so surprised? This firm's administration is breathtakingly bad. So it has taken them more than 4 years on reattribution. It's taken more than 15 years to amalgamate their 'legacy' business - and they STILL haven't done it.

The staff is hopeless – they don’t even have a decent knowledge of their own products – and that goes for their so called legal department as well. They are more a Civil Service Department than a commercial organisation. I wonder how long it will be before Mr. Cowdray grabs them as well?

The only thing I don't understand about AVIVA is why anyone would give them business.

Re James Junior - yes, Aviva are wriggling on the 10 year MVR free point. I spoke with them this morning & was told that the MVR-free guarantee is fine on the original investment, but because the special bonuses have not been applied for 10 years then these are subject to MVR still. So clients who were "encouraged" to remain in WP funds with Aviva in order to get the special bonuses etc are now in danger of having some of it taken away because they class these as further contributions.

Eels, in jars of vaseline & more slippery than are words that come to mind. Just re-arrange them to make a sentence.

Harry - yep, can confirm that their admin is still diabolical - systems were down until 11.30 (seems to be a regular occurrence), girl on the other end couldn't access one of the policies because it was on a different system & had to put me through to someone else in a different dept, who then had to do Data Protection checks on me again.

Absolutely ridiculous - they do not have a clue & wonder why the levels of new business from IFA's is dropping?? Has anyone seen the document they have produced showing Commission & Charge Options? That is something else!

I see no mention of the real victims of the great Aviva 'wait' saga, the thousands of policyholders whose plans matured before the dithering ended and who received no part of the orphan estate (and a poor result due to 'over bonusing' in the 90's)despite the fact that their savings over the previous 25 or so years had clearly contributed greatly to it - a scandal of Equitable Life proportions! TCF? Regulation? It seems more like 'every man for himself' and a classic case of caveat emptor

The FSA and the press were appraised of the shortcomings of the AVIVA project at it's inception. I had a 1.5 hour meeting with the ex gas board team of professional (£6 million budget over 2 years - extended) 'assessors' in London and reported then that the whole thing was an expensive chirade.

Not a professional grass routes customer facing, experiences practitioner in sight. Lawyers, accountants, actuaries? yes indeed, but who could speak for the consumer? The gas board dismantling team, of course.

As a Chartered Financial Planner with 40 years experience was appauled attheir arrogance.

ONCE MORE THE REGULATOR IS TOO LATE.

If this is the FSA just getting round to criticising Aviva, then they are clearly at fault for not chasing this up earlier.

Surely it is one of the main elements of delegation to check on the progress long before any deadlines? After all if a deadline exists, what is the point in reaching that deadline and then checking if the project is complete?

Because if it isn't complete, it's too late to find out after the deadline.

This shows yet again the flaws in simple management training in the FSA and the UK in general. The simplest flaw is that it just doesn't seem to exist at all!

But maybe I'm just a cynic?

It is really sad to see the demise of service in NU to Aviva. They run in fits and starts leaving all IFA s in a difficult position with clients. They have set up a number of Surveys on pertformance and service levels over the years but seem never to have taken the medicine. This makes it even worse to sustain existing business with an old established soundly funded arrogant and poor service company. Their variations on the With profits theme do little to enhance their position in the market.

disappointingly for clients I have to agree with the comments of Martin Cox in that the Aviva service is appalling. A matter of "give us your money to invest but you can't have it back without a fight". Do these people realise how many invoices they will be receiving for time spent when RDR arrives?

To follow the (accurate) comments of Martin and Hugh, I have only one observation:

For many years the very name of Norwich Union has been hugely respected in the insurance world.

(I'm not saying that they are good or bad at doing what they do - only that their brand name was hugely respected.)

But what pratt (presumably with a marketing degree and no marketing experience?) decided to change it to Aviva???

It's akin to M&S deciding to rebrand as S&M!!!