Tom McPhail (pictured), Head of Pensions Research at Hargreaves Lansdown, comments on the FCA annuity market study report…
The FCA has not found any evidence of widespread misselling of annuities; there is no smoking gun. In fact they have gone further than that by explicitly endorsing annuities as good value for money, but only if customers shop around on the open market.
They have however established that competition does not work well in the retirement income market. Significant changes need to be made to the way the pensions industry helps its customers to get the best value from their retirement savings.
The communications sent to retiring customers, the wake up packs and the ABI Code of Conduct are not having the desired effect and the FCA has confirmed its intention for a radical rethink. This is welcome news, coming as it does just a few months ahead of the new pension access freedoms. This is a vindication of the campaigning work of the Pensions Income Choice Association and of companies like Hargreaves Lansdown, but the job is not yet done. Improvements to the shopping around system are urgently required – everyday thousands risk being disadvantaged.
