People in receipt of annuities will receive 100 per cent compensation if their provider goes bust, the Prudential Regulation Authority has confirmed.
Following a consultation the PRA says it plans to increase the long-term insurance – including annuities, pensions and life assurance – FSCS compensation limits to 100 per cent, up from 90 per cent.
The regulator says increasing the protection will raise “the compensation costs associated with funding life insurer failures, increase compliance cost for protected firms and potentially will have implications for competition in the market”.
However, it says the benefits of greater consumer protection outweigh the extra costs.
The PRA estimates the change would have cost an average of £7m in compensation costs if it had been in place between 2008 and 2013.