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Annuity Direct warns on Omo misselling

Annuity Direct has warned that some open market option services are not offering a full whole-of-market annuity service to clients which could lead to misselling .

The retirement specialist says some providers and advisers are restricting the number of product providers they use and will pass it off as a whole-of-market service and will only offer one or two enhanced providers and one normal-rate provider.

Annuity Direct says this will mean the client may not get the best rate and to restrict the choice to just one or two makes the possibility of getting the best rate nothing more than a lottery.

The firm is also calling on the FSA to make it clear that its rules on pension switching apply to the exercising of the open market option.

Chief executive Bob Bullivant says: “Conversion of a pension fund is probably the largest transaction that a client will make besides a house purchase. It needs careful analysis of the existing arrangements and then a full whole-of-market service to include products other than annuities.

“Last month, Annuity Direct clients on average obtained an increase of more than 15 per cent per year on that offered by their ceding provider. Nothing short of a full service can produce this result. These services are dangerous and could lead to yet another misselling scandal.”

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