Savers are fighting back against insurers' attempts to rip them off on compensation payouts for underpayments made by insurers errors. But their efforts are being brushed off by Aviva and Friends Life

Aviva, Britain’s largest insurer, is refusing to compensate fairly customers whose pensions it has underpaid as a result of its own errors. In doing so it is going against the guidance of the financial ombudsman. Worse, many of its elderly customers will not understand that they are being paid less than they are entitled to. Aviva is telling customers that the 8pc statutory interest rate on compensation recommended by the courts and the financial ombudsman is “not reasonable”, and instead chooses to use a stingier rate that would chop around a third off a lump sum paid to a customer for 10 years’ worth of losses. The issue has arisen following Aviva’s admission of widespread pension miscalculations, first exposed in Telegraph Money, where tens of thousands of pensioners missed out on decades’ worth of income. This was because of errors made in calculating savers’ funds. Typically such compensation is paid with interest added at a rate of 8pc – a rate set down by the Financial Ombudsman Service (FOS) and courts.......Read more here