Pensions - Articles - FCA’s ruling needs clarification to be effective


Portal Financial, one of the UK’s largest pensions advisers, has welcomed the FCA’s decision that pension companies must inform consumers of better deals, but worries how clear the information will be.

 Consumers have had the right to shop around for better deals since the Open Market Option was introduced, but a lack of legislation has meant that providers can bury the information within the small print of a lengthy and confusing document – if they mention it at all.
  
 Research by the FCA has discovered 60% of people stay with their existing provider when purchasing an annuity, and 80% of those could have secured a higher income on the open market. That increased to a huge 91% of those who took an enhanced annuity.
 However, a number of factors could explain why so many people stay with their existing provider: it is easier to accept the quote than to explore the market, some firms charge to transfer funds elsewhere, and there is no obligation for firms to explain the Open Market Option in simple language.
  
 Jamie Smith-Thompson, managing director at Portal Financial, says:
 “Although it is excellent news that consumers will be informed of their right to shop around, my concern is how the information will be delivered. The ABI has been encouraging providers to explain the Open Market Option in wake-up packs for years. However, a lack of legislation has allowed providers to bury it within the packs rather than making it clear and prominent. If the new ruling does not state how the information is to be delivered then we could just see more of the same.
  
 “Purchasing an annuity is usually a decision that is only made once, so it is essential that the consumer makes the right choice. If Pension Wise will give details on the Open Market Option or the stark difference in income that different annuities can provide, perhaps providers should direct consumers to the government guidance service as well as regulated advice so that they at least understand the importance of shopping around.”
  

Back to Index


Similar News to this Story

Wish list for the occupational pensions industry in 2025
As one year closes and another begins, it's an opportune moment to set our sights on the future. The UK occupational pensions industry faces nume
PSIG announces outcome of Consultation
The Pensions Scams Industry Group (PSIG), which was established in 2014 to help protect pension scheme members from scams, today announced the feedbac
Transfer values fell to a 12 month low during November
XPS Group’s Transfer Value Index reached a 12-month low, dropping to £151,000 during November 2024 before then recovering to its previous month-end po

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.