Aviva pays out £21m on Friends Provident advice claims

Aviva has paid out £21m to customers affected by historic unsuitable defined benefit transfer advice in 2019, its annual accounts have confirmed.

The insurance company said it had a £229m provision for the “product governance issue” relating to defined benefit advice given to Friends Provident customers.

This figure was £21m below the £250m provision from 2018 and concerns advice given by Friends Provident between 1994 and 2002, before it became part of Friends Life and was snapped up by Aviva in 2015.

The company said: “We have completed a thorough and detailed review of the suitability of the advice given, and we will ensure that no affected customers are financially disadvantaged.

"There has been no significant change to the provision estimate or estimation methodology since 31 December 2018.”

Aviva commented that the issue was not expected to affect any other part of its business, adding that the group had notified its professional indemnity insurers and intends to make a claim on its insurance to mitigate the financial impact.

Aviva also reported a pension surplus of £1.98bn at 31 December 2019, down from £2.56bn in 2018.

This decline was due to liabilities jumping from £15.52bn to £16.79bn over the same period, though this was offset slightly by total pension scheme assets coming in at £18.77bn for the year, up from £18.08bn at the same point 12 months prior.

Aviva explained that the primary reason for the reduction in surplus was the bulk annuity buy-in transaction completed by the Aviva Staff Pension Scheme with Aviva Life & Pensions, which saw the premium paid by the scheme exceed the valuation of the plan asset recognised.

    Share Story:

Recent Stories

Time for change: An interview with Nick Burns, CEO, Gallagher’s Employee Benefits Consulting Division, U.K
Francesca Fabrizi interviews Nick Burns, CEO, Gallagher’s Employee Benefits Consulting Division, U.K about the UK pensions industry and asks why the time for change is now

Addressing climate change risk in fixed income portfolios
Francesca Fabrizi meets Lee Clements, director of SRI research at FTSE Russell, to discuss climate change risk in investment portfolios