Norwich’s gaffe costs it £6 million |
|
|
Published
:
Thu, 05 May 2005 13:20
|
In a public confession, Norwich Union admit that it had made a mistake regarding certain policy charges and therefore, had planned to redress the affected 70,000 customers by giving them an average refund of about £90 each.
Owned by insurance giant, Aviva, Norwich Union owned up for an error on its part concerning investment fund charges, saying that it had not disclosed in full some of the charges levied on its unit-linked funds like the Corporate Distribution Fund and Balanced Distribution Fund. The insurer spotted the glitch while a review was being conducted in October, last year. The undisclosed charges entailed total expense ratios (TERs) that included administration, service, audit and regulatory fees.
| While Norwich agreed that the TERs had not been revealed, it maintained that the yearly management charges were disclosed to the customers accurately. It also asserted that in spite of the discrepancy in the disclosure of charges, it had not overcharged customers or levied extra charges on them.
The customers would be duly refunded by increasing the value of their policies to include the unveiled charges. Meanwhile, cheques would be sent to those customers who were no longer associated with the company. This reimbursement is expected to cost the insurer about £6million.
Norwich Union representative, James Evans, said, "Customers knew there would be charges on the funds. We have taken the correct charge out, but when we disclosed it, we did not disclose the charges fully. We discovered this error and we are putting it right, refunding customers and moving on."
Customers will be informed in the coming three months about the details of the mistake along with specifications regarding the increment to their policies. Norwich also declared that henceforth, customers joining new funds in December 2005 and pensions in March 2006 would be informed about all charges in the beginning itself.
|
|
|
|
|
|
Print this Story
