Aviva is set to pay out over £2m in compensation to 40,000 pension savers after they were misled by original marketing literature which suggested its Aviva Deposit fund would provide protection of capital.
The company told FTAdviser it had identified the issue in the course of ‘normal business reviews’, which found that although terms and conditions were correct the literature had also implied that customers’ capital investments were secure.
According to the figures quoted by the Daily Telegraph, which first published the story, investors are to receive on average around £55, due to the fact Aviva has admitted that the marketing material implied values would not go below the original level invested.
The firm admitted bank interest rates are so low that customers’ investments can go below their original capital investment once charges are deducted.
Aviva is making payments to those customers affected, however, it is letting customers know that their investments are subject to fluctuation going forwards.
A spokesperson for Aviva said: “As part of our continual review of our products we are currently mailing our Aviva Deposit Fund customers to emphasise that their investments can fluctuate according to market conditions, and that these type of funds are intended as a shorter-term investment. This is really important given the current market conditions and low interest rates.
“As part of our review we also identified that although our terms and conditions were correct, that we had implied in some of our older marketing literature that customers’ funds would not fall below the amount they had invested. This was not correct and we apologise for any misunderstanding. Our focus is always to correct any error we have made with a fair resolution for our customers.”
The news follows one week after the company admitted it was making landmark payouts to annuity clients who were sold conventional annuities through a now-closed telesales process which did not include any health questions.
On average the 250 affected clients, who are being contacted by the firm, have received £500 to top up past payments and will get £120 more per year.
ruth.gillbe@ft.com
