NU plans to deprive investors of £150 million
Norwich Union is reported to be planning to use £150 million of its inherited estate (also known as “orphan funds”) to pay for claims made against the company.
The insurer is in the process of reattributing the funds to with-profits policyholders and shareholders but according to the consumer group Which? part of the money is being earmarked to pay for past mis-selling.
The Financial Services Authority (FSA) currently allows the money in with-profits funds to be used in a number of ways, including settling compensations claims, although it is considering a change in its regulations.
Which? is strongly opposed to the use of with-profits funds to meet business-related expenses and has threatened to take the matter to court.
Norwich Union is still negotiating the reattribution of the £5 billion in surplus assets but also wants to use some of the money to finance business expansion.
The company’s 1.1 million with-profits policyholders are represented by Policyholder Advocate, Clare Spottiswoode, who has called the FSA’s position “unfair”.
Dominic Lindley, financial policy adviser to Which?, describes the FSA as “completely failing consumers”.
He is suggesting that billions of pounds of with-profits money has already been used to pay for the mis-selling of endowments and pensions and that the FSA has done little or nothing to stop the practice.
Category: Insurance News, Norwich Union Insurance News
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