Aviva moved closer to taking control of £3.3bn of assets in two of its with-profits funds on Thursday. Britain's biggest insurer has appointed Clare Spottiswoode, the former gas regulator, as its policyholder advocate. She will represent customers of Aviva, as it decides how much of the £3.3bn it can take for itself.
Spottiswoode faces a tough challenge. The value of orphan asset estates across the industry is so large that executives are prepared to face the wrath of policyholders in order to get as much of the cash as possible. The assets have built up because insurers have not distributed it to generations of with-profits customers with endowment and pension policies.
The principle of with-profits is that in good investment years, insurers keep some money back in order to pay bonuses when times are not so good. It turns out that for decades, most insurers were over-cautious, so huge surpluses have been amassed.
Working out exactly who owns this cash is a legal - and moral - minefield. At one time, it was savers' money, but most of the customers who were underpaid bonuses have long since departed. So how should this cash be split between an insurer's current customers and its shareholders?
Aviva wants to implement a similar scheme to a model adopted by Axa five years ago. It paid policyholders a few hundred pounds each, in return for a declaration they would make no further claims on the insurer's £1.7bn of orphan assets. Axa was then able to use this money to support its business.
The Axa scheme was bitterly opposed by the Consumers' Association - not so much on the principle, but more so over the size of the payments offered. The consumer group believes insurers should get no more than 10 per cent of orphan assets, the share of profits of life funds that shareholders in quoted with-profits providers can claim.
Axa got much more - after successfully defeating a legal challenge to its proposals, the scheme went ahead. But will Aviva - formed after a merger of Norwich Union and Commercial Union - be prepared to risk such a public relations disaster?
Spottiswoode's role should be to get large payments for with-profits policyholders. Given the ongoing scandal of underperforming endowment-linked mortgages - and the general underperformance of savings plans - consumers occupy the moral high ground when it comes to with-profits providers.
Aviva customers have every right to demand a greater share of the spoils than Axa policyholders received - even if the latter won its legal battles.
Aviva is nervous. It does not want to be accused of raiding policyholders' funds, but the insurer has warned it will not go ahead with a deal unless it is in the interests of shareholders too. It's time to call this bluff.
n n n As more than 40,000 people have been wrongly accused of filing tax returns late over the past two years - and fined £100 - you can understand why most people handing in forms at tax centres in the run-up to Tuesday's self assessment deadline wanted receipts.
Tough luck, said HM Revenue & Customs. It has told staff not to issue receipts for tax returns, as it wants them to focus on people who need advice. Many taxpayers thenhad the idea of photographing themselves handing over the return. No way, said the Revenue. Photos aren't allowed in government buildings.
Still, what else can you expect from an organisation that demands 6.5 per cent interest on unpaid tax, but only offers 2.25 per cent if it overcharges you?