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FSA unveils two-stage annuity probe plans
by Brian Cantwell on Jan 31, 2013 at 10:36
The Financial Services Authority (FSA) has unveiled the details of its annuity investigation.
The FSA will conduct the work in two stages.
The first phase of this work will consider the level of detriment consumers suffer from not shopping around.
The second will depend on the outcome of the first phase, and will consider whether firms' processes for providing annuities facilitate or inhibit shopping around.
As part of the review the FSA will conduct a pricing survey of all annuity providers, and will compare the rates available to consumers through a range of distribution channels, including through the open market option and those only available to existing pension policyholders.
The FSA said the timing of the work will take account of the implementation of the Association of British Insurers (ABI) code of conduct, set to come into force on 1 March.
Nick Poyntz-Wright, FSA head of life insurance, said: '[Incoming regulator] the Financial Conduct Authority has set out its vision to make sure markets work well so consumers get a fair deal.'
‘An annuity purchase is an important one off decision that has long term consequences for individuals if they get it wrong.'
‘We want to understand the level of the potential detriment for consumers if they do not shop around to see if there are ways to make this market work better for consumers.'
Research by enhanced annuity provider MGM showed that 42% of the over 55s have not heard of the open market option (OMO), which was up from 2011 when 31% said they hadn’t heard of the OMO.
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