Annuity Mis-Selling Review

Annuity Mis-Selling Review.

The finance industry regulator, the Financial Conduct Authority (FCA) has ordered all pension and annuity companies to review all annuities since 2008 where no advice was given to ensure that the options and best outcomes for retiring clients were achieved.

Over the last few years, there has been a voluntary code established by the Association of British Insurers (ABI) where pension and insurance companies volunteered to tell their clients about their options for an ‘open market option’ to search the whole annuity market to secure the highest annuity rate for their pension income and also highlighting that for people with ill-health, there is also the possibility of an ‘ill-health’ enhanced annuity.

Given research by the FCA and indeed, additional research by Unbiased (the IFA trade body) it found that just 26% of people over the age of 55 had sought advice on their retirement options.

This clearly highlights that the public are not being made aware in a clear and transparent manner that they have the option to search the market and possibly secure a bigger pension income.

Comment

At this stage, this is not a full pension mis-selling review, but the regulator has asked insurance companies for facts and numerical data on who did what, how many people took no advice whatsoever, how many stayed with their existing pension company or indeed took their annuity out with a company arrangement where insurance company A (holding the pension fund) has a direct deal with company B (the annuity company) and full commission was paid without any advice.

We suspect that the results, once formulated, will compel the FCA to instigate a full review of non-advised annuity sales and compensation may start ‘flying around’ yet again.