View more on these topics

FCA could force insurers to publish claims data

FSA Letters 480

The FCA may force all insurers to publish claims data and is considering whether to intervene in the annuity market to enable consumers to more easily compare their options at retirement.

The FSA has published a discussion paper which looks at ideas to improve the transparency of the new regulator the Financial Conduct Authority and the wider financial services industry.

Its proposals include requiring insurers to publish standard information on the level of claims they have paid out.

The FSA says publishing claims paid data would help advisers to compare products and would help consumers to focus on a product’s value rather than its price.

The regulator believes initially this could work well for “add-on” products such as identity theft cover and mobile phone insurance.

Suggestions for what data insurers would have to publish include: claims per customer; successful claims percentage following initial contact, premiums versus payout ratios; and statistics on how many claims are reduced or refused due to non-disclosure.

The FSA also says the FCA may have a role to play in making the annuity market “more transparent, comprehensible and comparable”.

The regulator raises concerns about how well consumers understand the annuity offer from their pension provider and the importance of shopping around when buying an annuity.

It says it is looking at how it could improve the process so that consumers can compare alternative options in a meaningful way.

The FSA says: “When considering whether intervention is required, we intend to work with industry, the Money Advice Service and consumer bodies, and ensure the work of the Association of British Insurers and other stakeholders is taken into account.”

The regulator says it is particularly concerned about the one-off nature of an annuity purchase; the inability for consumers to change their minds; the tendency not to shop around; the difficulty consumers face in knowing whether they are reviewing options from the whole of the market; and knowing what options are available to them personally.

Possible regulatory intervention in the annuity market comes after the FSA announced in January it was to investigate the annuity market by examining pricing data to determine how much pensioners are losing out by not shopping around for a retirement product.

The ABI’s code of conduct on retirement choices, which requires members to prompt customers about their options at retirement in light of their specific circumstances, came into effect on 1 March.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

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

  1. Interesting to see what happens with the annuity market project. If they and the Government were serious about this, they could easily ensure that every single retiree has shopped around by banningthe payment of annuity without advice having been confirmed as been given, having shopped around. This could be a couple of boxes in an application sent directly to the policyholder by their pension provider that should include an advisers name, address and FSA number and signature. No annuity should be paid without these. All of a sudden you will get a huge uptake of OMO. Everyone’s a winner except those with crap annuity rates. No beaurocracy, no expensive research, very little cost to anyone to implement. Any bets that the actual process will take months and months to put together, huge resourse spent on research to find out what everyone already knows?

  2. Great theory but why would any sensible IFA stick their name to a piece of paper opening them up to possible liability without chargin a substantial fee. Those who have a reasonable pension pot won’t be a problem – those who haven’t i.e. the “problem” won’t be able to pay the fee anyway.

    Yet another example of RDR working really well (again).

  3. Julian Stevens 5th March 2013 at 9:47 am

    To Marty ~ bang on. Why, after all this time, is the regulator still faffing about on this issue? It could and should have solved it at a stroke at least a decade ago by making shopping around (with independent/WoM advice) the default option.

    I have two clients who approached their provider a few years ago saying that they “needed some money out of their pension fund”.

    Without mentioning the importance of seeking outside advice, said providers set up Income DrawDown for both, apparently without telling them that if they didn’t take their PCLS then, they’d not be able to in the future. As a result, both have now lost the option to do so ~ and one of them definitely needs a lump sum to clear a debt.

    If these aren’t just two examples of consumer detriment due to lack of regulatory action (i.e. negligence), then I don’t know what are. Worse still, cases such as this could have been averted so simply, easily and cost-effectively ~ unfortunately, three expressions that just don’t seem to be part of the regulator’s vocabulary.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com