Although the FCA has found no evidence of industry-wide, or systemic failure to provide customers with sufficient information about enhanced annuities through non-advised sales, there are concerns that some communication failings took place at a small number of firms.
The FCA has asked these firms to carry out a more extensive review of non-advised sales and to provide redress where appropriate. They are also being investigated by the FCA’s Enforcement Division to determine whether further action is necessary.
Generally, the FCA found many of the firms provided clear and comprehensive information to customers with written communication tending to meet the standards required.
Megan Butler, director of supervision – investment, wholesale and specialist at the FCA said: “Annuities play an important role in providing an income for retirement. It is important that consumers get the right information at the right time in order to make the right decision for their retirement.
“While we have found particularly poor behaviour at a small number of firms, there is no evidence that firms have systemically failed to provide customers with the information required by our rules. Firms, particularly those outside our sample, should look at the report we have published today and consider whether they can make improvements.”
Head of retirement policy at Hargreaves Lansdown Tom McPhail commented: “The FCA’s review has given the non-advised annuity sector a reasonably clean bill of health however they also found some failings which for a minority of customers may eventually lead to their getting some compensation. They also found that even where insurance companies follow the letter of the regulations, they still don’t always communicate effectively with their customers.
“If you are buying an annuity, and tens of thousands of pension investors still do every year, you absolutely must shop around. In a small number of cases your existing pension provider may actually be able to offer you the best deal on the market but the chances are that they won’t. Shopping around means getting a better deal every year for the rest of your life; you only have to do it once so it is worth taking the time to do it well.”