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Roadshow Reaches Heart of England

Policyholders will have to vote individually on any deal offered by Norwich Union to secure a payment - champion Clare Spottiswoode told Birmingham on the third leg of the "meet the policyholders" tour.
"Most times when there's an event like this you get a large document through your door and you're asked to vote and if you don't vote then the majority wins and you go along with the majority.
"I know I have been guilty of this - thinking I don't need to worry, somebody else will go through the detail. But in this case if you don't vote you will not get a payment because with each individual policy you will have a choice of whether to go with the proposed deal or stay as you are," she said.
Clare explained to the audience of 173 who had travelled from across the West Midlands to the event at the Burlington Hotel that a complex task following the negotiation with Norwich Union would be dividing the pot among policyholders.
She explained the Policyholder Advocate's team would have to consider a range of options: "You've all got competing interests; you've all got policies which are different.
"One of the big questions for us is: is there any reason why any particular groups of policyholders should have more or less than any others, and if so, why? And would it be considered as fair by the broad group of policyholders?
"Another really important issue is should people who have been in the fund for a long time get more or should somebody who has a longer time to run on their policy and more much more chance of a distribution in the future get more because they are giving up much more potentially?
"Now we know from previous events that is not felt to be fair justice by many."

What Birmingham asked Clare:

Q. Why a reattribution whereby the shareholders take control of the money as opposed to a distribution in which 90 per cent goes to the policyholders?
A. This is one of the most difficult issues of all because policyholders have a right to 90 per cent of a distribution. However, directors at the moment have discretion how and when those payments are made and they are made very rarely. As part of this process we want to ensure we understand and can get more clarity about how and when directors make their decisions on these distributions.
Q. Why hasn't the inherited estate been used to top up the annual bonuses and terminal bonuses?
A. It is certainly true that Aviva could have chosen to have spent some of the money of the inherited estate over the last few years on enhancing bonuses. They do say that they have slightly over-smoothed over the last few years. So, people have been paid slightly more than their asset share. However, we have not seen the numbers yet and we are doing those investigations as part of the process.
Q. Where did the money in the inherited estate come from?
A. It is not easy to trace this money up and down through all the transactions to find out exactly where it did come from. We're trying to get that information from Aviva but it's not easy for them to provide it. But at the end of the day it's there and our job is to make sure we do the best we possibly can on your behalf - that we come to a deal that is fair to you and as generous as we can make it.
Q. What will be the tax treatment of any payout? Would it be liable to income tax or capital gains tax or would it be treated just as a return of capita?
A. We are sincerely hoping that this payment will be tax-free for both income tax and capital gains tax. It's not been fully confirmed because HM Revenue and Customs has got to approve it. There is a complication on pensions where it has traditionally been quite difficult to get a tax-free sum but in that case it will be translated into a benefit.
Q. If my policy is cashed in part during the period of consultation do I lose any benefits under the proposed reattribution?
A. It's quite likely that you benefit would be reduced in some pro-rata way. We're still discussing how exactly that will work.
Q. How do I get my share of future distributions (90 per cent) if I vote against reattribution?
A. You will be left in an old fund. Effectively after the deal the fund will be split into those who have voted in favour and that fund will be transferred 100 per cent to shareholders - you will no longer have rights to 90 per cent of any future distribution that you will receive a cash payment. If you don't vote or you vote no, you'll be kept in an old fund and you will have your share you the inherited estate which will continue to pay out 90 per cent but at the directors' discretion.

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