ASA Adjudication on Aviva Annuity UK Ltd
22 December 2010
Number of complaints:
AMV BBDO Ltd
A TV ad for pensions showed a man clipping a hedge who said "We always thought when I packed in work that we'd up sticks and move somewhere warmer. Had a good look round first though, I can tell you." He and his wife were then shown looking at a number of dilapidated properties in different areas of France. Superimposed text at the bottom of the screen stated "UK only. Terms, conditions & exclusions apply. Applies to Standard Annuity only. See website for details. Source: Directly Financial 9.3.10. The ad then showed the couple sitting at a table in a sunny garden. The man stated "And it paid off. Did exactly the same with my pension and Aviva got me nigh on 20% more income from my pension pot ...". At the end of the ad a voice-over stated "When you retire get up to 20% more income with Aviva".
Four viewers challenged whether the claim "When you retire get up to "20% more income with Aviva" was misleading and could be substantiated.
BCAP TV Code
Aviva Insurance Services UK Ltd (Aviva) explained that individuals who invested in a personal pension were obliged, upon retirement, to use the accumulated pension fund to provide themselves with an income for the rest of their lives. They said the best way of doing that, for most people, was by purchasing an annuity and that that could be done either taking an annuity from their current pension provider or by shopping around other pension plan providers and annuity specialists for a better deal.
Aviva said the market for annuities could be grouped into two relevant categories: open-market providers whose rates were publicly available and non open-market providers who did not publish their rates. They said they could demonstrate that the "up to 20% more" claim was valid when comparing Avivas rates to providers in both of those categories. They said that, because market share data was not publicly available for the annuities market, they had used a Mori poll to establish market share for those two categories, which showed that 55 per cent of people of retirement age with a personal pension fell into the open-market category and 45 per cent fell into the non-open-market category.
Aviva submitted a spreadsheet which compared Avivas annuity rates with those of their competitors on the open market, as published by Directly Financial, and pointed out that they had included both pension plan providers and specialist annuity providers. They said that that spreadsheet showed a range of individual retirement scenarios based on varying factors such as sex, age, single or joint life basis and size of pension pot. They said that data showed where Avivas rate was better than their competitors rates, as well as where a competitor offered a better rate. They also provided a secondary spreadsheet which showed the percentage differences between Aviva and their competitors in each scenario and highlighted where Aviva offered 20 per cent or more than a competitor. They said that data showed that Aviva offered annuity rates of 20 per cent or more than their competitors in 22 per cent of cases.
Aviva believed that the degree to which they offered a better annuity rate than their open market competitors was sufficiently high to justify the claim in the ad without reference to providers in the non open-market. They said, however, they had conducted an analysis on the non open-market also and, because pension providers who did not sell annuities on the open market generally did not publish their annuity rates, they had therefore had to make an assumption about what those rates would be, before they could compare them.
Aviva said, because those providers had chosen not to compete on the open market, they had assumed that annuity rates in that category would be lower than those given by the most competitive companies on the open market. On that basis they concluded that they would be at least as competitive in that category, if not significantly more so, and that over half of customers with non open-market providers would get at least 20 per cent more by moving to Aviva than by staying with a non open-market provider.
Aviva said they had also worked with a leading annuity specialist to obtain details of actual quotations (ceding data) given to customers of other pension providers, where Aviva had also been considered. They said that data was obtained over the course of a month prior to the launch of the ad and again for two two-week periods during the campaign. They said that additional data supported their earlier conclusions about both open-market and non open-market annuity providers. Aviva said they were therefore happy with the claim that customers could get 20 per cent more with Aviva, but that they were also monitoring the market on an ongoing basis and would withdraw the ad if they believed the claim was no longer valid.
Clearcast said the inclusion of the statement "up to" made clear that the claim was not absolute and ensured that viewers would not be misled into thinking they would definitely get that increase. They said they would expect that at least 10 per cent of customers would achieve that increase and believed that the primary spreadsheet submitted by Aviva showed that that was the case. They said they had received the spreadsheet as substantiation at the time that they cleared the ad and also received confirmation that it contained the most up-to-date figures and covered the majority of the market, only omitting some additional options that were not material to the outcome. They said, because they had received confirmation that the comparison being made was between standard annuities only, they asked the agency to include the statement "Applies to Standard Annuity only" as superimposed text. They said, having reviewed the ad, the claim and the substantiation, they were happy with the decision to approve it.
The ASA considered that the claim "Did exactly the same with my pension and Aviva got me nigh on 20% more income from my pension pot", in the context of the ads depiction of a man looking around for the most suitable retirement property, would be understood by viewers to mean that Aviva could offer up to 20 per cent more annuity income than their competitors.
We noted that the claim was based on data from Directly Financial, provided by Aviva, which showed the rates they offered alongside that of nine of their competitors, in 72 annuity scenarios, and the percentage by which Avivas rate was different from those of their competitors. We noted that that amounted to 648 comparisons overall and we also noted Avivas argument that the data showed their annuity rate was greater than their competitors, by 20 per cent or more, in 22 per cent of cases (or 145 comparisons).
We noted that the Directly Financial data related to various scenarios that retirees might find themselves in when they came to buy their annuity, according to various combinations of factors including the size of their pension pot, their age and health. However, while we noted those scenarios were extensive, we also noted that we had not seen evidence that showed how many actual customers were likely to be represented by each of those scenarios. We therefore considered that it was not necessarily safe to assume that the percentage of cases in which Aviva offered an annuity rate of 20 per cent or more corresponded to an equal percentage of real customers.
Notwithstanding that, we also noted that the vast majority of comparisons where Aviva offered a rate at least 20 per cent better than their competitors related to quotes from three of the nine open market competitors only, and we also understood from the market share data supplied by Aviva that those three companies in turn made up only six per cent of all open-market providers. We also noted that, when compared with the remaining six open market competitors, Aviva offered an annuity rate that was at least 20 per cent better than that offered by those other companies in only three per cent of cases.
We were therefore concerned that, when compared with other open-market providers, Aviva were only able to offer 20 per cent more annuity in a small number of cases, which in turn were likely to be realised by only a small number of actual customers. We therefore considered that it was not necessarily safe to assume, on the basis of the Directly Financial data, that customers choosing Aviva over their own open market pension provider, would achieve an increase of "up to 20 per cent" in their annuity.
We understood that the Directly Financial data related to open-market annuities only, and we understood from Avivas response that non open-market annuities accounted for around 45 per cent of the annuity market. We therefore considered that we would also need to see robust comparative data relating to non open-market providers in order to support the claim. We noted that, because non open-market annuity rates were not published, Aviva had made the assumption that those rates would always be less competitive than those on the open market, and based on the Directly Financial data, had calculated that their own annuity rate would be better by at least 20 per cent in over half of non-open market annuity scenarios. Notwithstanding our concerns above about that data, we considered that we had not seen evidence that showed that Avivas assumptions about non open-market annuity rates were representative of the actual annuity rates offered by competitors in that sector. Although we noted that Aviva believed the ceding data supported their conclusions about non open-market rates, we also noted that that ceding data compared the rates given to 32 individual customers only, and furthermore that it was not clear from that data what type of pension or annuity those customers had, or whether the data related to all non-open market providers. We therefore did not consider that it was safe to assume that the ceding data was representative of the rates that could be achieved by the majority of consumers, or of the different standard annuity scenarios available, in the non open-market sector.
Because we considered that we had not seen evidence that demonstrated that Aviva could get consumers up to 20 per cent more annuity income than other providers, we concluded that the claim was misleading.
The ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1.1, 5.1.2 (Misleading advertising), 5.2.1 (Evidence), 5.4.6 (Comparative advertising).
The ad must not be broadcast again in its current form.
Adjudication of the ASA Council (Broadcast)