Oral question asked in the House of Lords, by Lord Joffe (Labour). It was answered on Tuesday, 22 April 2008.

Finance: Inherited Estates

Question: My Lords, I thank the Minister for his reply, but the problem rests with the Financial Services Authority rules. My noble friend may not be aware that in the current negotiations relating to the reattribution of the inherited estate of the Norwich Union, amounting to £3.2 billion, both the policyholders’ advocate and Which? have expressed concern about whether policyholders will get a fair deal under the FSA rules. Although the FSA— My Lords, are not the Government concerned that the effect of these rules will be that much of the 90 per cent of the inherited estate due to policyholders, as set out in the Government’s published policy on inherited estates, will go to shareholders rather than policyholders? Will they put pressure on the FSA to ensure that the government policy of 90 per cent of the inherited estate to policyholders and 10 per cent to shareholders will be followed in reattributions?

Answer: My Lords, I am grateful to my noble friend for his question. There is a distinction between the distribution of surplus funds, which has followed and does follow the broad principle of 90 per cent to policyholders and 10 per cent to shareholders, and the issue of reattribution which arises in the Norwich Union case. This is because reattribution involves the buyout of policyholders and raises the issue of the company’s necessary assets for the future as well as accumulated assets in the past; it raises different issues. That is why the FSA scrutinises these arrangements with great care, as I indicated in my Answer. Negotiations are still going on between Norwich Union and the policyholder advocate. We await the outcome of those negotiations.

Secondary information

Type: Oral question
Reference: 700 c1382
Session: 2007-08
Oral question type: 1st Supplementary
Chamber / Committee: House of Lords chamber
Subjects: Consumers Finance Insurance companies Insurance Protection Shareholders Norwich Union
Link: View this Oral question on www.publications.parliament.uk