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Alan Lakey: An enhanced annuity experience to forget

Advisers frequently contend with situations where they ask themselves whether the behaviour of a financial institution is reasonable and measured or whether it extends beyond tolerable and acceptable.

The latest example to cross my desk relates to an enhanced annuity application and the subsequent antics of Just Retirement.

During November my client, Mr X, decided to take benefits from two personal pension plans. Our meeting unearthed his likely ability to obtain an enhanced annuity. He suffers from raised cholesterol; mild asthma, is on medication and smokes three cigars a day, having previously been a heavy cigarette smoker.

Just Retirement offered the highest annuity by some way and Mr X elected to go with it. Shortly after applying Just Retirement asked that Mr X write a letter confirming the size of cigar he smoked.

On 13 December the company received £93,000 funds from both ceding schemes.

Six days later it advised “a slight discrepancy in the clients smoking habits has been identified between the information provided in the annuitants medical declaration and the GPs report”.

As a result it requested that Mr X sign a declaration confirming his daily cigar intake and the size of the cigars and then have it countersigned by his GP. Additionally, they asked for sight of his regular prescription as there was “a discrepancy regarding the medication taken”.

A letter dated 28 December advised me that the funds were still outstanding, this despite them having been received two weeks earlier.

Then in early January, Just Retirement asked for details of the types of and weight of the cigars he smoked. Apparently advising them of Henri Wintermans and King Edward wasn’t really sufficient, although Mr X and I did stop short of weighing the things.

By now, with the funds having languished in Just retirement’s account for over five weeks I wrote making a formal complaint, one which is still being considered.

The company then asked that Mr X obtain a letter from his GP confirming the diagnosis of asthma and the fact that he used a bronchodilator inhaler.

This was provided at the start of February and, as I write this piece, Just Retirement has confirmed to me that it will not meet the original quotation because the GP has stated the asthma is “dormant” and that the bronchodilator is not greatly used.

Asthma cannot be cured and tends to flare up due to colds, flu and exposure to certain substances, dust, animal fur, etc. Bronchodilators are for use as required and may last for quite a while as they contain around 200 puffs per item.

Now, at no point has the information received by them disagreed with that originally provided in November. Its application form did not ask for any additional information as it relied on the common quotation form and the information within.

The requests for information were disjointed and could easily have been made as one exercise once the GP report was available and this added to the delays.

It has led Mr X into believing Just Retirement regretted its original attractive quote and has since been looking for a way to weasel out of it. I sympathise with this view.

What is the point of providing information to a provider which informs a quotation but can be adjusted after the funds have been received? The applicant is stuck with the annuity provider with no realistic opportunity to change tack.

At this point the matter will be passed across to the Financial Ombudsman Service. Maybe it can prod this recalcitrant company into playing fair.

Alan Lakey is partner in Highclere Financial Services


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. The asthma question may have two sides to it. I also have asthma and most of us have two inhalers, one we take daily and the other when needed. Possibly Mr X inadvertantly implied he used the latter regularly when he meant the former.

    The cigar thing is completely silly. Have Just Retirement’s actuaries really spent a day sitting there with a range of cigars and some scales on their desks, calculating different life expectancies for light cigars and heavy ones?

  2. This client only used a sal-butamol inhaler when required. No other asthma medication

  3. Just Retirement and their ilk are full of it. I regularly attend seminars where they boast how much they can increase a retirees income. Whenever I get some quotes off them, the client literally needs to be on their death bed to get the sorts of increases they promise.

  4. We do some business with JR and to date it has not been our experience. But I am concerned to learn about this.

    Last time I write a piece implying criticism of two platforms I had sales directors from both contact me direct within hours to address my issue. It will be interesting to see if JR are as switched on…

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