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Omo take-up slides after FSA disclosure

The Government&#39s initiative to open up the annuity market has been undermined by figures from the ABI which reveal the Omo take-up has fallen in the last 12 months.

Last September, the FSA implemented new rules on the open market option, requiring product providers to inform clients of their right to shop around for an annuity, inclu-ding sending out a fact- sheet detailing what consumers should take into account when buying an annuity and how to get the best deal.

But the latest ABI figures show that take-up of the Omo has fallen to 31.2 per cent in the second quarter of this year from 38.2 per cent in the third quarter last year. Before the regulations were brought in, the Omo figures stood at 35.5 per cent in Q1 2002 and 33.7 per cent for Q2.

The fact that fewer people are shopping around for a better deal on their annuity despite the widespread publicity push behind the Omo has left many in the industry calling on the Government to rethink the policy.

ABI spokeswoman Emma Grainge says that many people who shop around find the best deal is with their current insurer, which is not reflected in the figures.

The FSA says it is carrying out its own follow-up research, due to be completed this year.

Grainge says: “There is, no doubt, a need to get more people shopping around. However, we need to get a better measurement of who is taking up the open market option.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “The FSA proposal to disclose is a very good idea. However, I feel that at the moment consumers are not being best served by the present system and it is time for a rethink and to question whether it can be done any more effectively.”

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