Paul Feeney is not in an enviable position. While it is usually tough to feel sorry for the competition, it is hard to imagine the Old Mutual Wealth chief executive has been jumping for joy on reading about Aviva’s litany of platform problems. It was only last year that Feeney hitched the development of his own platform to the same technology provider that Aviva is using, FNZ.
Do not get me wrong, this is by far and away Aviva’s problem right now. The Aviva for advisers website lists a multitude of errors that the provider is having to fix. As soon as one is sorted another one crops up, it seems.
Here are some examples:
'At migration, any cash held outside of a model was auto swept into model cash. This has impacted clients being disinvested to fund charges/withdrawals.’ Target fix date: week commencing 19 February.
‘There are delays to disinvestment which has resulted in a delay to adviser fees being paid. We are looking to resolve as a priority.’ Target fix date: 28 February.
‘There are some instances where customers have not received payments on phased drawdown. We will resolve this as an urgent priority.' Target fix date: TBC.
The list, at the time of writing, is fairly long. Problems and fixes are listed under categories such as models and portfolio administration, monies in and out, adviser remuneration and reporting. To be fair it is a transparent way of dealing with the problems and advisers will feel a bit better for being able to track the progress of an issue.
Advisers will recall this is not the first time Aviva has been in this situation.
In 2004 Aviva bought the Lifetime platform, for £13 million, but was forced to close it in 2008 following a catalogue of problems. As we reported at the time, Aviva called in accountants Deloitte to check whether clients had suffered any financial detriment as a result of Lifetime’s problems. The Financial Services Authority was involved in the review.
Back to the present and Aviva’s chief executive Andy Briggs has written to advisers apologising for the platform’s rocky relaunch, which has also seen Aviva step in to cover clients’ income payments from its own pocket. It's a headache.
Of course, Aviva and Old Mutual are not the only providers using FNZ.
FNZ powers platforms at Standard Life and Zurich. Banks Santander and Barclays also use it. Last year Aegon confirmed it was signing a contract with FNZ to upgrade its institutional platform. FNZ’s assets under administration hit £74.4 billion. Plenty of advisers have a stake in how well FNZ performs.
But Old Mutual has more at stake than most and is not unfair to focus on the firm’s own history with problematic platforms.
Last year Feeney pulled the plug on its contact with technology provider IFDS, which was building a brand new platform for Old Mutual’ s clients. Old Mutual had already spent £330 million on the project when Feeney called time. Speaking to us after, he said: ‘I was not prepared to stand up to the stock market again and say this project is taking longer and costing more,’ adding ‘so now I do not have to [tell the stock market that]. We have moved on’.
Feeney also explained why he chose FNZ to take over the project.
While IFDS had promised to deliver a platform superior to anything that existed in the market, Feeney said that by the time it came to dumping IFDS FNZ was already capable of delivering much more than when the whole process began.
FNZ also gained merit with Feeney for being a regulated entity. Few are, and Feeney said FNZ voluntarily submitted itself to that status.
Feeney also made somewhat of a virtue out of the IFDS debacle, arguing that the team working on Old Mutual’s replatforming project ‘has gained a lot of experience’ and that ‘we have hit the ground running’.
A similar-sounding line was taken when we asked Old Mutual, along with other providers this week, whether it would hit pause on its work with FNZ in light of Aviva’s troubles.
‘While every programme will bring its own challenges, this provides further useful experience for FNZ of large scale migration projects. We remain confident in FNZ’s migration abilities,’ said head of platform proposition Jeremy Mugridge. All the other providers we spoke to also said they stood by FNZ.
As German philosopher Friedrich Nietzsche wrote: ‘That which does not kill us, makes us stronger’ (or was that Kanye West?). Certainly Feeney hopes that will be the case.