The FSA plans to compel life companies to highlight the open market option
to policyholders three months before they have to buy an annuity, after the
regulator gets its full powers in November.
The move could see an advice bonanza as figures from the ABI show that
only 27 per cent of policyholders currently take the Omo in a market
reckoned to be worth around £5.7bn.
Some life offices currently notify customers that they do not need to buy
an annuity from them only at the point when they are about to make a
The news comes as the FSA announced a full-scale review of post-retirement
and at-retirement products, including annuities, income drawdown and equity
Spokeswoman Jackie Blyth says: “We put out guidance suggesting it is
better to let policyholders know about the open market option around three
months before the policyholder has to make their decision which is not
compulsory at the moment.
“We would want to look into requiring all life off-ices to do what some
are already doing.”
Britannic Retirement Solutions corporate development director Bob
Bullivant says: “Two out of three people are deciding to take less income
for the rest of their lives, when if they were to visit an IFA they would
see immediate benefit. We have been campaigning for this for the last year.”