Norwich Union told to make offer

Clare Spottiswoode acts on behalf of 1.1m Aviva policyholders

The Norwich Union insurance company has been told to make a cash offer to buy out policyholders' remaining share of a surplus in two "with profits" funds.

In February the firm said 1.1 million policyholders would see bonuses worth a total £2.1bn added to policies.

But it has been in dispute with the policyholders' advocate Claire Spottiswoode over the remaining £3.2bn.

She says the company should now make an offer to buy out the policyholders' rights to the remaining money.

The Norwich Union, part of the Aviva insurance group, has told her how much it would like to offer, but for the time being the precise sum is not being revealed.

Decision time

Ms Spottiswoode is delivering a 19 page letter to the company outlining her view of the proposed deal.

I want an offer to be made to policyholders so that they can make their own decision Claire Spottiswoode

"The next stage will be for the company to consider my response in detail and form its own conclusions about how to proceed," she said.

"My position is very clear - I want an offer to be made to policyholders so that they can make their own decision."

The offer, if it is eventually made, would affect investors in the CGNU Life and CULAC with-profits funds.

These are mainly customers with endowment policies, pension policies and with-profits bonds.

The consumers association Which? said it would watch closely the outcome of the negotiations.

"This is a key test as to whether the Financial Services Authority is serious about ensuring customers are treated fairly or whether it allows a repeat of the AXA case when it approved a deal which short-changed policyholders," said Dominic Lindley of Which?

"We are worried that Norwich Union is trying to get away with one of the largest smash and grab raids in the history of the financial services industry," he added.