Orphaned Client Money Pays Claims

Orphaned Client Money Pays Claims

Which? has attacked providers using their inherited estates to pay mis-selling costs, claiming it is like “allowing people to commit a crime and avoid a fine”.  Principle policy adviser Dominic Lindley claimed Norwich Union used £180m of its estate to pay mis-selling costs and £83m to top up its staff pension scheme.  He said Norwich Union used hundreds of millions of pounds to pay shareholder tax, to the detriment of its policyholders.

Lindley also said that AXA had used £400m of its inherited estate to pay shareholder tax.  The FSA is consulting on whether mis-selling costs can be paid using inherited estates.

Our view

We have to agree with Which? on this one.  If a provider is fined it should hit their own profits and not profits of their policyholders, even if they cannot be traced and it is orphaned money.  The fact remains that it is not their money.  

However, in exactly the same way, people who are making calls for orphan money to pay for investor protection funds and compensation funds cannot make calls for the money to go their way.  

Orphaned money belongs to the policyholder, their estates or their next of kin and it should be distributed accordingly.  Records are held at HRMC, at the DWP and at the Land Registry as well as Church, local authority, banks and other records.  These people or their relatives, the rightful owners, could be found, the Government just want the funds for their own use.

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