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Concerns at complex decumulation choices

The Financial Services Consumer Panel is concerned about “gaps” in the regulation of decumulation products and the ability of advisers to deal with the growing complexity of products.

The Later Life Scoping Project report by Jackie Wells and Mary Gostelow says consumers suffer from a lack of information, guidance and advice in the decumulation market and this can lead to lost opportunities to maximise retirement income and suggests this should be an area where the panel focuses its efforts.

It raises concerns over the growing complexity of decumulation products. It says: “In the case of new-style annuities, there is little current evidence of and no research on detriment but concerns about whether the products represent good value have been raised in recent times.” It adds: “Broader concerns have been raised about the abil- ity of advisers to deal with the growing complexity of products.”

The research finds there is a lack of clarity over the risks with some decumulation products which could result in poor choices. It warns that consumer understanding remains low and the scope for misselling or misbuying high.

Panel chairman Adam Phillips says: “It is crucial that people who have worked hard to save for their retirement are able to get appropriate advice and buy financial products which are value for money to sustain them into old age. We will use the findings to focus our work and to engage in constructive dialogue with the FSA and organisations working with people in later life.”

Annuity Direct director Stuart Bayliss says: “The industry is not good at dealing with older people. We need to ensure we are able to continue to advise people through old age, partic-ularly as products get more complex. The consumer panel is right to draw attention to this issue.”

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