Competition probe for annuities
THE CITY watchdog today announced a competition probe into the annuities market over fears pensioners are being ripped off by unfair sales techniques.
Sixty per cent of retirees buy an annuity through their current provider, even though shopping around could boost their income by more than 10 per cent, the Financial Conduct Authority (FCA) found.
“As part of the competition market study, further supervisory work [will look] at how pension provider sales teams conduct themselves when selling annuities to existing customers,” the FCA said.
“This will include retention teams who try and keep existing customers.”
The Financial Ombudsman Service (FOS) receives 50 to 60 complaints about annuities each month, and it upholds around one-third of those.
It blames a lack of clarity for many of the problems.
“Though many of the complaints we see are very complex, when we get to the crux of the matter, it becomes apparent that if the pension firm had made more of an effort to explain in plain English how the annuity works and what it is, many of the complaints could have been avoided,” said the FOS. The FCA will consider new rules for annuity providers as part of the study, and will publish interim results in the summer.
It also found comparison sites do not always make it easy to compare products, and have demanded changes to their presentations.