ABI launches new OMO code of conduct

20 December 2011 11:25 am | By Chris Salih

The Association of British Insurers has outlined more details of its new code of conduct for members to encourage more people to shop around for an annuity.

The trade body proposes that all statements to customers mention the benefits of shopping around on the first page and stricter rules on the illustration of possible annuities given by the provider which have not been asked for by the customer. It will look to ensure providers’ sales processes take customers through key questions that must be considered ahead of buying an annuity.

The move follows the trade bodies’ announcement in September that it would introduce a compulsory code including forcing members to remove the annuity application form in the communications they send to customers.

ABI director of life and savings Maggie Craig there are still too many people who are not shopping around at retirement who are missing out on thousands of pounds of retirement income as a consequence.

She says: “We want to do everything we can to help people get a good income in retirement which is why we are asking for views on the code we plan to introduce. We want to make sure our proposals will really make a difference so we will also research what will have an impact on customer behaviour to help people make good choices.”

ABI’s draft code of conduct proposals are:

• All communication with customers must include a standard statement on the first page about the benefits of shopping around
• Illustrations of possible annuities given by the provider which have not been asked for by the customer must follow strict rules to ensure options are comparable and include a very clear statement about the benefits of enhanced annuities due to medical conditions even if the provider does not offer the product
• Providers’ sales processes must take customers through the key questions they should consider when buying an annuity.      

Pensions Income Choice Association chairman Tom McPhail says: “The Code will serve to simplify the retirement experience, emphasise the importance of shopping around, highlight the significance of enhanced rates for those who are eligible and ensure that all investors are led through in inter-active process prior to personalised quotations being issued.

“There remains considerable work to be done and whilst the Code will undoubtedly bring significant progress for pension investors, we have also identified additional reforms which we believe could further improve investor outcomes.”

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