And why does the FSA turn a blind eye?
New research from Partnership Assurance, commissioned by Hargreaves Lansdown, shows the average time taken to transfer a customer’s pension pot to their chosen annuity provider shockingly increased last year to 30 working days, up from 22 in 2007.
This is despite the Association of British Insurers’ initiative to speed up transfers.
Partnership analysed 7,500 of its cases over four years and found Windsor Life’s customers were suffering the most. The firm made them wait on average 99 working days for their funds to be transferred last year – a threefold increase from 33 days in 2007.
Lincoln Financial Group was the second worst provider on the list of almost 50 firms, taking an average of 73 working days to transfer funds, up from 35 days the previous year.
NatWest took an average of 59 days, while HSBC took 57 days compared with 19 days in 2007 and Pearl Assurance forced customers to wait 49 days compared with 34 days the previous year.
Aegon took 40 days on average to transfer money, despite being at the forefront of the Options initiative.
Meanwhile, Axa, Friends Provident, Legal & General, Prudential, Scottish Life and Scottish Widows all took 30 working days or longer to get the money across, according to the research.
Some of these providers expressed surprise at Partnership’s findings, claiming they did not square with their own figures.
Windsor Life claims its average transfer time is in fact 7 days. While a Lincoln spokeswoman says: “We take treating customers fairly very seriously and are confident we are meeting this responsibility.”
But Partnership insists the data directly reflects its experience with these companies.
According to the ABI, Options is helping to improve the situation.
Spokesman Jon French says: “Options has got off to a great start and we need to build on that success.
“We want all relevant companies using the system and urge any who are not to start as soon as possible.”
But Hargreaves Lansdown pensions analyst Nigel Callaghan says the initiative is “too little, too late”. He believes it is time for the FSA to show some teeth.
He says: “Insurers have shown they are not prepared to police themselves. The FSA needs to force minimum standards and to give investors an automatic right of redress in the event of non-compliance.
“These companies are taking a commercial decision to eke a little more profit out of their loyal customers. They are earning an AMC for every day they stall the transfer. This flies in the face of treating customers fairly, smacks of commercial cynicism and simply cannot continue.”
What is your view? Have you had similar experiences where transfers take months? Should the FSA roll up its sleeves? To comment, click on the link below.