The RDR will strip away the “level playing field” in annuity comparison tables, potentially nullifying the effectiveness of open market option reforms, according to Legal & General.
The life and pensions provider has written to the FSA expressing concerns the RDR will muddy the waters of comparison tables, which it says are widely used by consumers.
L&G argues the creation of adviser charging will result in a “significant change” in remuneration for annuity advice and product pricing, with providers likely to produce different rate sets as a result.
Head of annuity product developments Tim Gosden says providers will have to strip out commission loading to facilitate the payment of a fee to the adviser, which they can then either charge to the customer or the pension fund itself.
Gosden says: “At the moment, if you are a consumer shopping around the market for the best annuity and you go on comparison tables, it is fairly easy to compare with different providers. The RDR is going to dramatically change things.
“What the RDR is going to create is a myriad of rate sets, whereas at the moment it is a level playing field. It could be a real setback for the OMO.”