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FCA requests data from insurers in annuity market review


The Financial Conduct Authority has requested pricing information from insurance companies as part of its investigation into the annuity market.

The regulator launched a thematic review of annuities in January this year in response to concerns people are failing to shop around when they reach retirement.

The FCA has now written to pension providers requesting information on annuity pricing.

An FCA spokesman says: “As part of our review into annuities, which explores whether any potential financial losses are suffered by not shopping around, we have asked providers to send us data relating to their existing pension customers, the annuity rates they offer, annuity sales volumes and data on profitability of new annuity business.

“This will help us to build a comprehensive picture of the market and help us meet the objectives of the review.”

The FCA’s review is being conducted in two phases. The first phase involves analysing the level of detriment consumers suffer as a result of not shopping around, and whether there are firms or particular groups of customers where this detriment is more likely to occur.

The second phase of the review will consider whether firms’ processes for providing annuities facilitate or inhibit shopping around.


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

  1. Yawn.
    And the recommendation will be what… spend time and effort to shop around in a market full of poor annuity rates to find the marginally best of a bad bunch???

    Focus on a way to deliver a real outcome from the purchase fund.

    No doubt thousand will turn to millions spent to tell us something obvious and pointless.

  2. Becoming a headcase IFA 25th June 2013 at 3:45 pm

    I am rather hoping they are looking at the issue of companies like Abbey Life, where they used to pay commission to advisers on the annuities that the client bought directly, if they were registered to an IFA, where the IFA had told them it would be too expensive and counter-productive for the clinet to receive advice on a small fund).
    Have Abbey Life (who are not now paying commission on an unadvised basis) passing the benefit on to the client or pocketing the extra for themselves).

    Also, what is the situation, when the client has to apy a fee to the adviser for being recommneded to take a possible GAR from Abbey Life, when they would not have had to under the commission basis. Are they paying Abbey Life as well as the IFA or have Abbey allowed for the non payment of commission in their annuity offering?

  3. What should the outcome of this review be? That most life assurance companies have already factored the annuity profit margin from their legacy pension book into their balance sheets which would take a massive hit if they were forced to offer competitive rates at retirement? I don’t think much will be achieved.

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