Former gas regulator gets role with Aviva

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Aviva, the UK's largest insurer, pushed ahead with plans to unlock some of the £3.3bn of orphan assets within two of its with-profits funds yesterday. It appointed Clare Spottiswoode, a former energy regulator, as the independent advocate to represent policyholders' interests in the process.

Orphan assets are surpluses within with-profits funds to which no policyholder has a direct claim. Reattributing the assets is likely to spark a clash between policyholders and investors, who both believe they have a right to the majority of the cash.

Although the law states the assets are the property of the company, consumer groups such as Which? claim legislation indicates 90 per cent of the money should be allocated to policyholders and 10 per cent to company investors.

Mick McAteer, a senior policy adviser at Which?, who was involved in the fight for policyholder rights when AXA unlocked £1.7bn from its Equity & Law funds five years ago, said Ms Spottiswoode's job would prove difficult, with the law still stacked unfairly against policyholders.

"There isn't any point in having an independent policyholder advocate when they've got their hands tied behind their back," he said. "The government policy since 1995 has said that whenever there is a reattribution, it should be done on a 90/10 basis in favour of the policyholder. But the law says the company owns the assets." He said a move to reattribute the majority of funds to shareholders would further damage the financial services industry's reputation at a time when some confidence had been returning to the market.

Ms Spottiswoode said she expected to talk to policyholders in the autumn.