Article date: 3 May 2005
Norwich Union has conducted a review of the wayit discloses its charges and total expense ratios (TERs)*. As aresult of the review, the company has discovered that, on some ofits unit linked funds, not all charges were correctly disclosed topolicyholders.
To correct this, Norwich Union will be refundingthe undisclosed charges back to affected customers by increasingtheir individual policy value. This will mean that around 70,000policyholders will see an increase in their policy value which willbe, on average, £90.
These policyholders were correctly informedabout the annual management charges, however, the other charges,which together make up the TER, were not correctly disclosed. Goingforward, Norwich Union will absorb these undisclosed charges on theaffected funds for these policyholders.
Norwich Union will be writing to affectedcustomers in the next three months to advise them of this and toinform them when their policy value will be increased. Customersshould wait to receive their letter from Norwich Union and do notneed to take any action themselves.
* The TER represents all the costs declared bythe fund manager, including the annual management charges andexpresses them as an annual percentage.
For those affected customers who have since leftthe funds, Norwich Union will be contacting these people to refundthe undisclosed charges. This refund will be by cheque.
New investments into theaffected funds will benefit from Norwich Union absorbing thecharges above the annual management charges, which, together makeup the TER. This approach will continue until Norwich Unionlaunches new funds - expected to be December 2005 for investmentsand March 2006 for pensions. For Norwich Union InternationalLimited, new investments funds will be launched from 30 May2005.
Press office contacts:
James Evans 01904452791 Out of hours 07800 699525
Rob Pell 01904 452659 Out of hours 07800 699563
Notes to editors
- The charges that were not correctly disclosed were mainly thepublished TER expenses in respect of collective investmentvehicles used by some of our funds such as: administration,service, audit and regulatory fees that can be charged directlyto fund.
- Norwich Union is the UK’s largest insurer. It is a leadingprovider of life, pensions and investment products and one ofthe leading IFA providers. IFAs provide around 70% of thecompany’s long-term savings business.
- Norwich Union has strategic alliances with building societiesand other leading UK brand names including Tesco PersonalFinance and The Royal Bank of Scotland Group.
- Norwich Union’s news releases and a selection of imagesare available from Aviva's internet press centre at www.aviva.com/media.