Aviva paid out some £21m on claims related to historic unsuitable defined benefit transfer advice in 2019.
The pensions and insurance giant’s yearly accounts, published today (March 25), showed Aviva’s provision for compensation for Friends Provident customers now stood at £229m.
This was £21m less than the £250m it had earmarked for advice given by the firm's tied agents and appointed representatives last year.
The report stated: “This provision relates to a historical issue with over 90 per cent of cases identified being pre-2002 and is limited to advised sales by Friends Provident, where a number of external defined benefit pension arrangements transferred into Friends Provident pension arrangements.
“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.”
Friends Provident was a life company that became part of Friends Life, which was then bought by Aviva in 2015.
The issue relates to historic advice given between 1994 and 2002, which concerns about 4,000 customers, Aviva stated last year.
In today’s report, Aviva said there had been no significant change to the provision estimates since the end of 2018.
It said it did not affect any other part of its business and the group had notified its professional indemnity insurers.
A further £175m had been put aside for another subset of pension policyholders. Aviva suspects these customers may not have been adequately informed about their switching options into with-profit funds that were available to them from Friends Life between 1985 and 1989.
Today’s accounts showed an increase in adjusted operating profit from £3bn in 2018 to £3.18bn in 2019 while Aviva’s net inflows into its investments, savings and retirement arm jumped from £6.8bn in 2018 to £7.5bn last year.
Aviva stated it also had built momentum and increased its share in the platform market, while its investment performance had strengthened with 84 per cent of Aviva Investors’ funds beating their benchmark over a 12-month horizon.
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