The FCA is under pressure to accelerate its annuities competition investigation after a thematic review found serious failings in the current market.
The regulator’s 12-month thematic review of the market, published last week, sets out concerns about the number of people failing to switch annuity provider when they reach retirement. It also warns providers may be incentivised to discourage customers from shopping around.
The FCA is carrying out a 12-month competition probe as a result.
Independent pensions consultant Ros Altmann says: “The FCA has powers to protect consumers properly, but it is launching another review rather than acting immediately.
“The reason why immediate action is so important is this market affects so many people and the transactions they are making are irreversible.”
Radcliffe & Newlands chartered financial planner Mel Kenny says: “The problems highlighted by the FCA have been known and documented for years. They have been incredibly slow to react on this issue.
“There are good providers out there but there are also some very bad providers. The FCA needs to come down hard on those who are consistently not offering their customers a good deal.”
Labour has proposed forcing all employers to offer an independent annuity broker service to employees at retirement.
Labour shadow pensions minister Gregg McClymont says: “The Government has ignored this problem for far too long in refusing to fix the broken annuities market.
Our proposal would ensure consumers get value for money when they turn their hard-earned savings into retirement income.”