12 December 2014
Consumer Panel urges FCA to address problems in the annuities market
Responding to today’s publication by the FCA of its annuities sales review and retirement income market study, the Financial Services Consumer Panel has called on the FCA to take action to address the persistent problems in the annuities market..
The issues highlighted in today’s report, including mis-selling, provision of incomplete information and an opaque fee structure, were discussed at length in the Panel’s 2013 research[1] into the annuities market and the subsequent market study by the FCA.
The Panel is particularly concerned about the consequences of the growth in the non-advice markets following implementation of the Retail Distribution Review. This growth is in part driven by the reduced regulatory liability firms face when selling through this channel and also by the fact that commission can still be paid. Consumers may not understand when a sale is ‘non-advised’, or that they have reduced recourse to redress should things go wrong.
Sue Lewis, Consumer Panel Chair, said:
“The pensions freedoms announced in the Budget earlier this year underline the need for all products which generate retirement income to work in consumers’ best interests. Annuities will continue to be right for some people. The FCA needs to fix detrimental sales practices in this market before more damage is done..
We urge the FCA to implement our recommendation to embed in its rules a code of practice for firms offering sales on a ‘non-advice’ basis. Today’s findings confirm the need for binding standards.”
Notes to editors.
- In December 2013, the Consumer Panel published a report[1] on the annuities market which concluded that the market does not work well for the majority of consumers. It recommended urgent regulatory and government-led structural reform in order to prevent millions of pensioners from losing out..
- The Consumer Panel is a statutory body under the Financial Services Act 2012. It was initially established by the Financial Services Authority in December 1998. The Panel advises the FCA on the interests and concerns of consumers.
- The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.
- The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit. More information about the Panel's work is available on its website or via its LinkedIn[2] and Twitter[3] accounts. .