James Daley: A great victory for consumers

The reattribution offer by Aviva promises to make around 1 million of its customers better off by at least £400, and represents a victory for consumerism.

While Aviva would have happily paid out much less, the pressure brought to bear by the independent policyholder advocate Clare Spottiswoode, and the consumer group Which?, have ensured that its customers have received as good an offer as they could have hoped for.

Assuming the deal gets the legal sign-off it requires, all policyholders in the CGNU Life or CULAC with-profits funds will soon be made an offer of a minimum of £400, and possibly as much as £1,000, depending on their policy's size and how long it has left until maturity. It's important to remember that this is not free money. This is an offer to buy out policyholders' future rights to Aviva's £4bn inherited estate – money to which no individual policyholder currently has a direct claim, but which could be used in the future to pay special distributions to those who don't accept what's currently on the table.

However, given that policyholders have already been promised a further £2.1bn from the fund via a special distribution, policyholders who accept the reattribution offer will have walked away with around 70 per cent of the estate's value. Not bad, when you compare it with the 30 per cent which Axa policyholders got back in 2000. The size of the offer makes it very unlikely that policyholders would do better hanging on to their rights. And it's a gamble for which they'll have to wait years to find out if they were right. In that time, that £400 or £1,000 could have been working hard for you in your fund.

It's a shame the Financial Services Authority never had the courage to force Aviva to pay back the money it used from the inherited estate to pay mis-selling claims and tax bills. If they had, policyholders may have ended up with even more money.