What we do
The background to Clare’s appointment as policyholder advocate
On 2 February 2006 Norwich Union announced that it had nominated Clare Spottiswoode CBE as the policyholder advocate in case it decided to go ahead with a plan to reorganise some of its with-profits funds.
These funds are CGNU Life and Commercial Union Life Assurance Company (CULAC).
This reorganisation is achieved through a process known as a ‘reattribution’ of ‘inherited estate’. (These terms are explained elsewhere in the site.)
Norwich Union announced on 21 November 2006 that it had decided to go ahead with the next stage of its plans and at that point formally appointed Clare as the policyholder advocate. For her work in ensuring that policyholders get the best possible payout from the inherited estate worth at the end of 2006 about £5,000,000,000 (that is, £5 billion), Clare is paid £250,000 a year.
An announcement was made on 30 July 2008 that a deal was to be put to policyholders which would be worth, if all eligible policyholders voted for it, some £1 billion. Work then was underway to complete all the paperwork necessary so policyholders could read the details and the courts could receive the legal documentation. However, on 4 February 2009 Norwich Union /Aviva announced that the turmoil in the financial markets meant that the estate had fallen in value and the deal no longer worked for the company. It was also announced that discussions were being re-opened with the policyholder advocate to try to restructure the deal.
A new, flexible deal is now to be put to policyholders. Minimum individual offers, based on personal circumstances, will be sent in June to policyholders including information to help them make their choice. Final payments to policyholders may change if the value of the inherited estates based on the average of June, July and August increases. Payments will be made from November, subject to the approval of the High Court approval and the Aviva board.
What is a ‘policyholder advocate’?
The policyholder advocate is the representative for all the eligible with-profits policyholders of a company that is considering a reattribution of inherited estates.
The policyholder advocate’s key job is to negotiate the size of any incentive to with-profits policyholders to give up their rights to any possible future distribution from the inherited estate. In addition the policyholder advocate and her team of financial and legal advisers :
- investigate the company’s plans and consider the advantages and disadvantages for policyholders
- consult with policyholders so that they have a chance to make their voice heard
- report to policyholders about the result of her negotiations and make recommendations to them
- are prepared, if necessary, to appear in court to explain her work.
The origin of the role of policyholder advocate
The role of policyholder advocate emerged as part of a Financial Services Authority’s review of the with-profits industry which began in spring 2001. The review was undertaken in two stages, the second stage being completed in January 2005.
Among the key themes considered in the review was the process for dealing with the attribution (which includes reattribution) of inherited estates. Part of the process included discussion of the idea of a person being appointed to represent the interests of policyholders in negotiations with a firm about a proposed reattribution.
One of the reasons for suggesting a policyholder advocate was dissatisfaction about the processes followed, and whether the outcomes were fair to policyholders, in a number of reattributions between 1985 and 2000.
If you would like to read more about the review carried out by the FSA, please click the link below which will take you to its website.
www.fsa.gov.uk/Pages/Library/Other_publications/Profits/index.shtmlWhat we don't do
The policyholder advocate’s responsibilities do not include dealing with individual policyholders on specific questions about their policies or investigating complaints about mis-selling. These issues are matters for Norwich Union to deal with and you can find them through this link http://www.fsa.gov.uk/
In particular, if you have a mortgage endowment policy and are concerned about it there are other organisations whose websites might contain helpful information.
The FSA has a lot of information on its website for people concerned about their mortgage endowments.
The Financial Ombudsman Service also has information specifically about what to do in the event of an unresolved dispute involving a mortgage endowment on its website.