The FSA is considering whether the Financial Conduct Authority should intervene in the annuity market to enable consumers to more easily shop around at retirement.
In its FCA transparency discussion paper, published this week, the FSA raises concerns about how well consumers understand the annuity offer they get from their pension provider and the importance of shopping around for a retirement product.
It says issues with the annuity market include the difficulties consumers face in understanding whether they are reviewing annuity offers from the whole of the market, and in knowing what alternative offers are available for them personally.
The FSA says: “We believe the regulator may have a role in making the annuity market more transparent, comprehensible and comparable.”
It adds it will work with the industry in assessing whether intervention in the annuity market is required.
The FSA announced in January it will investigate the annuity market to determine how much pensioners are losing out by not shopping around.
An ABI code of conduct, which requires members to prompt customers about their options at retirement, came into effect on 1 March.
Facts & Figures Financial Planners managing director Simon Webster says: “The easy way to fix the annuity market problem would to mandate the disclosure of the open market option on page one of pre-retirement literature, which signposts clients to an adviser.”