The open market annuity option factsheet is failing to get its message over to consumers and its format should be reviewed, says Annuity Bureau head of marketing David Marlow.
ABI figures show that the share of annuities bought by people exercising the Omo dropped in the quarter after the FSA introduced the requirement for life companies to notify customers that they might be able to get a better deal with another provider.
The ABI sales figures show that the proportion of annuities bought on the open market fell to 34 per cent of all annuity sales in the final quarter of 2002 from 38 per cent in the third quarter. The Omo regulations were introduced on September 1, 2002.
The ABI estimates that two-thirds of consumers who are not shopping around are getting annuity rates up to 30 per cent less than the best available on the market.
Marlow says: “There is nothing in the factsheet that highlights the difference between the income you will get and what is available elsewhere and it should be reviewed.”
FSA spokeswoman Jackie Blyth says: “The open market option is there to advise people. The fact that people have been informed is what we are concerned about. Whether they exercise the option is up to them.”