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.