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Drawdown misselling fear at annuity rates and Solvency II

The FSA is concerned about potential drawdown misselling as annuity rates tumble and Solvency II pushes investors towards alternative retirement products.

The regulator’s retail conduct risk outlook, published this week, sets out what it sees as the most significant risks in the retail investment market.

It says the removal of the requirement to annuitise pension savings by the age of 75, lower annuity rates and Solvency II potentially increasing the cost of annuities all mean alternative decumulation products are likely to become more popular.

The FSA says these products pose additional risks to consumers than those posed by traditional annuities, including the capital value of the fund being eroded and returns being less than those shown in illustrations and annuity or scheme pension rates falling in the future. It adds that high levels of income may not be sustainable when maximum withdrawals are taken under capped drawdown or when a short-term annuity is bought.

It says: “These factors increase the potential for misselling drawdown as advisers are likely to need to consider other variables such as capacity for loss that are not typically considered when an annuity is purchased.”

Yellowtail Financial Planning managing director Dennis Hall says: “Any responsible IFA has always known those risks apply to drawdown products.”


Heath-Lay to take over at B&CE as Griffiths retires

B&CE chief executive Brian Griffiths is retiring in September and will be replaced by director of finance and strategic delivery Patrick Heath-Lay. Chairman Sir John Chilcot says: “Brian has led B&CE for the past 10 years through challenging times within the financial services industry. “We have appointed a successor to the role of chief executive […]


FSA may implement some MMR changes earlier than mid-2013

The FSA says it may impose aspects of its mortgage market review earlier than 2013. In the final MMR consultation paper, published in December, the FSA said its rules would not come into force until the summer of 2013 at the earliest. But in its retail conduct risk outlook, published today, the regulator says it […]


Ignis strategic head departs- up to 20 jobs at risk

Ignis Asset Management head of strategic alliances Nick Pogmore has been made redundant and up to 20 staff have been put on consultation as part of a review of the firm’s distribution roles. Pogmore joined Ignis in November 2009 and was responsible for developing relationships with UK fund platforms, life offices, national IFAs and advisory […]


MetLife Assurance appoints Wayne Daniel as chief exec

MetLife Assurance has appointed Wayne Daniel as its new chief executive. Daniel joined MetLife Assurance, which provides risk transfer solutions, in late 2011 as vice president. He succeeds Dan DeKeizer is now vice president of global employee benefits, MetLife. Daniel joined from Credit Suisse, where he was managing director of longevity markets and prior to […]

Harris Associates' view on the UK’s vote to leave the EU

By David Herro, Partner, Deputy Chairman, Portfolio Manager and Chief Investment Officer of International Equity at Harris Associates Britain’s vote to exit the European Union has led to significant uncertainty across global markets. We believe market impact of this uncertainty, though severe, is more of a shorter-term phenomenon which will provide an opportunity for long-term […]


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