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FCA: 90,000 customers in line for enhanced annuity compensation

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The FCA’s review of enhanced annuity sales could see 90,000 customers receive compensation for misselling.

The regulator has confirmed that from its review of the annuity market released this morning, it can estimate that the number of customers in line for redress is approaching six figures.

As part of an investigation of 1200 non-advised sales at seven providers, the FCA found “no evidence of an industry-wide or systemic failure to provide customers with sufficient information about enhanced annuities,” but the regulator’s enforcement team is looking at “small number” of the firms after concerns were raised.

The FCA has asked firms who have “repeatedly failed” to provide sufficient information to customers about enhanced annuities to go back through their sales to identify those who are likely to be entitled to compensation.

The review says: “We will ask them to quantify that redress and compensate the customers accordingly.”

The FCA found that between 39 per cent and 48 per cent of consumers may have qualified for an enhanced annuity due to health or lifestyle conditions but only bought a standard one. The annuity income forgone for the average customer was estimated at £120 to £240 a year.

The ABI has since responded to the review playing down concerns over misselling.

“We are pleased but not surprised that this thorough and wide-ranging review by the FCA found ‘no evidence of an industry-wide or systemic failure to provide customers with sufficient information about enhanced annuities through non-advised sales’. As the FCA points out, the information firms have given customers about enhanced annuities in the majority of cases has been timely, relevant and adequate and enabled customers to make informed decisions.”

The trade body added that the industry had been “focused on improving people’s experiences of making retirement choices in recent years”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. I am not a great fan of the insurers at the best of times but you cannot expect an insurer who is approached directly by a consumer to provide them with regulated advice. The insurers have a range of products they sell if an enhanced annuity is not one of these, then should they be expected to promote them, I think not. The retirement pack from all insurers clearly state for the individual to take advice before they decide. If they ignore this they why should they have to compensate the individual, it was their choice to ignore the guidance. There is also the fact that most individuals will not divulge or even lie about their medical conditions, ask any adviser, so what chance as an untrained 21-year old Indian-based call centre operative have in identifying if the individual is eligable for an enhanced annuity – that’s ridiculous

  2. “non-advised sales”
    Need we say any more !
    The one question I would like to ask our all seeing all knowing regulator is…….with such huge systematic failures, why (via the project innovate) are they pushing hard to set up the whole non-advised / robo-advice market ?

    One could make the presumption, that you only get to make a informed decision, through proper “advice” ?

  3. I need to find a suitable provider for my private pension. I need an enhanced annuity. 25%lump sum. I have been on the comparison web sites and got a few quotes. I’m worried though about scams. How will I know if I am being scammed using these sites. I found one pension provider known as Just from one website with the best rate but worried it may be a scam. Please advise me what I should do as I have researched my pension options and only want the enhanced annuity pension. Could I not go through the pension providers without going through the middle man?

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