It believes that many consumers are missing out by not shopping around, or switching, for the best deal and are often deterred from doing so by the length and complexity of wake-up packs. The tendency to buy products from existing providers weakens competitive discipline on incumbent firms and makes it harder for challenger firms to attract a critical mass of customers.. Savers reaching retirement now face a landscape that is more complex and will need support in making the right choices.
The FCA’s proposed remedies include requiring firms to provide an annuity quotation ranking so that consumers can easily identify if they could be getting a better deal by shopping around, redesigning wake-up packs and other information that consumers receive in the run-up to retirement and, in the longer term creating a pensions dashboard to allow consumers to see all their pension pots in one place.
Commenting on the report Barnett Waddingham senior consultant Malcolm McLean says:
“There is very little that is new or surprising in this report’s findings - in many respects it simply reiterates what was in the earlier interim reports.
“It recognises, as we all do, that if consumers are to get the best possible deal out of an annuity purchase then they need to have access to the open market and shopping around by them or for them is an absolute must. To that end the requirement that firms provide an annuity quotation ranking for consumers to see the benefit of shopping around will be helpful but in itself does not guarantee the best outcome for the would-be annuitant. The need to redesign and radically simplify the wake-up pack is a complete non-brainer and should have been done years ago.
“Most disappointing of all is the pace at which change in a market so clearly in need of change is drifting along. The FCA plans to consider all this further and to run another customer survey as part of a wider review of its rules in the pension and retirement area later in the summer. It will probably be another year at least before the remedies kick in, making it 8 years since the regulatory probe of the market began.
“Both the FCA and its predecessors have shown a distinct lack of appetite for decisive action in relation to annuities. And as far as I can see from this latest lengthy report no sanctions appear to be being proposed against those providers whom the FCA had investigated and found evidence of poor practice, particularly where providers actively discouraged people from taking up enhanced annuity products, if not widespread misselling. Whereas it is important to get things on a proper footing for the future I am not sure it is right to completely ignore and disregard the failings of the past.”
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