The Prudential Regulation Authority (PRA) fined UKI for miscalculating its balance sheet during 2023 and 2024, resulting in its solvency being overstated to the regulator and market.
The miscalculation was due to “ineffective preventative and detective controls and resourcing issues in its finance and actuarial functions” and was undetected by Direct Line’s internal controls “for a significant period of time”.
After the miscalculation was identified, Direct Line notified the market and reported the correct figure. The group’s senior management also informed the PRA and undertook investigations to find the root cause of the error and remedied the problem.
Since it acquired Direct Line in 2025, Aviva has continued to improve Direct Line’s finance and actuarial control framework.
Because the firm made early admissions and agreed to resolve the matter, it qualified for a 50% reduction on the financial penalty, which would have been £21.5m.
What mortgage and protection advisers should take from the FCA’s AI stance
Sponsored by Sesame Bankhall Group
Sam Woods, deputy governor for prudential regulation and chief executive of the PRA, said: “We rely on accurate and reliable data from firms in order to be able to supervise them effectively. This penalty reflects the importance of firms getting their prudential reporting right.
“Direct Line and Aviva’s proactive engagement with the PRA, via the Early Account Scheme, shows how enforcement action can be more efficient when firms are open, candid and accept responsibility for failings at an early stage.”
Aviva said this related to a period before it acquired Direct Line and has since taken “extensive action” to enhance its financial reporting control environment.
It said: “Aviva was fully aware of this matter prior to agreeing the terms of the acquisition of Direct Line and the outcome is fully provided for in the acquisition balance sheet.
“The resolution of this matter has no impact on the integration of Direct Line into Aviva, which is proceeding well, and no impact on the expected financial benefits arising from the acquisition.”
