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Insurers to address FCA annuity sales confusion

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The Association of British Insurers plans to address confusion about apparently conflicting annuity sales data published by the industry and the FCA in recent weeks, Money Marketing understands.

Data published by the FCA last week suggested just 12,418 annuities were sold in the second quarter of 2015, compared to 46,368 in Q2 2014 and 89,896 in Q2 2013.

However, official ABI stats for Q2 2015 say 17,800 annuities were sold – over 5,000 more than the figure quoted by the regulator.

In a note to members, seen by Money Marketing, the ABI says: “The FCA data covers a larger number of firms than ours, but for insurers there were also substantial differences in the figures.

“We have discussed these with the FCA at aggregate level and the reason is that the FCA’s data request was intended to capture the options that pension providers’ customers had taken, rather than sales.”

As a result, the ABI note says the FCA data does not include external annuity sales “in many cases”.

The drawdown figures quoted by the FCA may also be skewed, the ABI note says.

It says for some firms the FCA data includes customers continuing in drawdown as well as those starting drawdown, and that the drawdown numbers include “a greater proportion of full cash withdrawals and withdrawal of tax-free lump sums”.

It adds: “When we publish annuity and income drawdown sales for Q3 2015 we will include a statement that explains why the FCA sales data was considerably different to ABI data.”

A senior industry source says: “It is quite extraordinary that the data quoted by the FCA might not include a large chunk of external annuity sales.

“We have a large divergence between what the industry says is happening and what the FCA says is happening. This data has been seized upon by some parts of the media and it might be wrong.

“The onus now has to be on the industry and the FCA to talk before the data is published again so we can avoid this kind of confusion.”

The ABI and the FCA declined to comment.

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Comments

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

  1. Data handling isn’t exactly the FCA’s forte is it?

  2. The FCA just do not understand the industry that they are supposed to regulate.
    It is, I am afraid, that simple.

  3. As ever do I smell an agenda?

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