MM Leader: Omo so near and yet so far
The ABI’s new mandatory code of conduct around the open market option is a step in the right direction but more needs to be done to ensure consumers make the most of their pension pots.
The code, due to be introduced early next year, will force providers to remove the annuity application form from communications sent to policyholders and so stop savings being automatically rolled over into the same provider’s annuity.
Removing this inertia should help matters but insurers will still be able to provide their own quotes, which many are likely to accept without shopping around.
It would be concerning if ABI members saw this move as the endgame rather than another step along the road to improving consumers’ retirement options.
The trade body has come under significant media and political pressure over the Omo. With certain members having a great deal to lose from consumers exercising their right to shop around, the ABI is still failing to be as progressive as it needs to be.
A cross-industry Omo working group should report its findings to the Government by the end of the year and is likely to suggest much more radical reform than the unilateral proposal set out by the ABI this week.
Politicians should welcome this code but continue to press for further improvements to ensure people arrive at the best retirement solutions achievable to them.
News that pressure group Justice in Financial Services is looking to judicially review the way the FSA has acted in organising its £54m Arch cru compensation package again highlights the raw deal investors are being offered.
In its role as authorised corporate director of the fund range, the assets should have been the responsibility of Capita. Alongside distributions already made and the remaining assets, the package should see investors receive 70 per cent of their funds compared to when the range was suspended in March 2009.
Arch cru investors were entitled to much higher levels of protection from the FSA and Capita than they received. At a time when we are trying to improve confidence in financial services, they also deserve much higher levels of compensation than has been put on the table through this compensation package.