Aviva ‘confusion’ on policy discount

I have a Healthier Solutions insurance policy with Aviva that I pay for annually.

Recently Aviva sent me a renewal notice saying it could no longer give a 5pc discount for paying annually due to changes in the Consumer Credit Act.

What is going on? RYAN BOND, KINCARDINESHIRE

Aviva told me: “By offering certain customers a discount on their annual premium, it may mean we are viewed as having the equivalent of a credit charge in place for customers who pay for an equivalent policy monthly.

“The Government passed legislation in relation to the Financial Services and Markets Act 2000, which can be summarised as stating that, if we charge a customer more for paying monthly, rather than annually, for their policy, the monthly arrangement may be subject to regulation by the CCA, whereas the annual arrangement is not.”

I pointed out that under an amendment to the Financial Services and Markets Act 2000 on March 18 2015 in section 2(a) there is a reference to “four” payments in the act (Regulated Activities) Order 2001 ( b) increasing to 12 over a maximum 12-month period. This seemed to distance the situation at issue more from the Consumer Credit Act rather than bringing it nearer.

Aviva responded: “Article 60F also stipulates other conditions, which are to be met… including that no interest or other significant charge is made in respect of the credit agreement.” It is this ambiguity it is seeking to address.

Aviva has redistributed the discount to all its Healthier Solutions customers, bringing a 1pc reduction across the board. For someone whose annual premium paid upfront would have been £1,140 it will now be £1,188 whether paid monthly or annually.

Aviva has apologised for confusion in the leaflet and is updating it. It has also given you a 5pc discount on this year’s premium.

Only my involvement led to your receiving written confirmation that the case is indeed closed and to say that the bank is very sorry for the inconvenience caused. Another £50 has been sent.

As you say, bank staff seem to have no idea the worry and stress this type of allegation causes.