UK regulator says insurance companies should disclose how annuity quotes compare with peers
The FCA said this morning in its retirement market income study that it is proposing to “require firms to make it clear to consumers how their quote compares relative to other providers operating on the open market”.
The regulator said the information could be provided using the Money Advice Service’s own comparison website to generate a variety of relevant quotes.
It has also proposed a ‘Pensions Dashboard’ that would allow consumers to view all their lifetime pension savings in one place in its long-awaited review.
Additionally, it is proposing the introduction of what it called a ‘behaviourally-trialled’ alternative to the current system of wake-up packs.
The recommendations follows a wide-ranging review into whether competition in the retirement income market is working for retirees. Today’s findings are outlined in an interim report.
The review was prompted by initial work conducted by the FCA in February, which found that the annuities market “was not working well for most consumers”.
As well as recommendations for the wider market, the regulator has also published the results of a review into non-advised annuity sales practices.
That identified particular areas of concern in relation to enhanced annuities, where customers are often not informed of shopping around or encouraged to do so to get a higher income.
FCA director of policy, risk and research Christopher Woolard said: “The Budget reforms are a game changer for the retirement income market. People will be given more choice and many will want some support to ensure they make the right decisions for them.
“The Government’s new guidance guarantee, with the standards we have already proposed is a vital part of this, now firms need to play their part.”
“We want to see firms improving the way they communicate with their customers. In order for the pension reforms to work and for people to have trust and confidence in the products they are buying firms need to act now.”