Aviva has set aside a further £90m to compensate Friends Provident customers, which might have received unsuitable advice relating to defined benefit (DB) transfers.
Lindsey Rix, managing director of savings and retirement at the provider, told FTAdviser Aviva was working to fix the issue, which relates to historic advice, and estimates it will be resolved by next year.
She said: "This is related to historic advice given between 1994 and 2002, which concerns a population of about 4,000 customers.
"It's an historic issue that we have provided appropriately for and we will be proactively contacting customers to make sure they're not financially disadvantaged."
In total, Aviva’s provision to this matter now stands at £165m, and is limited to advice given by Friends Provident's tied agents and appointed representatives, as stated in its interim report out this morning (2 August).
Ms Rix said the provider will start to contact the affected clients towards the end of August, and while it will look to resolve the issue "as quickly as possible", it could take a little longer for some.
She said: "Some of these cases are quite complex and quite old, we will need to work through them in detail to ensure that we fully rectify any issues in the past."
Ms Rix said no further funds will be needed to compensate Friends Provident’s clients.
She said: "At this point in time, we feel we have appropriately provided for the issue that we have and we know this is a ring-fenced population.
"We spent quite a lot of time over the first half of the year [on this]."
Friends Provident was a life company that became part of Friends Life, which was then bought by Aviva in 2015.
Aviva said the issue does not affect any other part of its business, and that it has notified its professional indemnity insurers and intends to make a claim on its insurance to mitigate the financial impact of compensating these customers.
The provider published its interim results today, which showed operating profits declined 2 per cent to £1.4bn, due to weak results in Canadian motor insurance, adverse weather and business divestments.
Aviva expects these factors to abate or reverse in the second half, however, and is confident it will meet its goal of creating above 5 per cent growth in operating earnings per share, which had increased 4 per cent to 26.8 pence in the past six months.
Alistair Cunningham, financial planning director at Wingate Financial Planning, said: "This seems to be a very large sum, very late in the day – it’s over £20,000 per client. It’s puzzling that the redress could not have been calculated and settled sooner."
maria.espadinha@ft.com
