U.S. regulators aren’t the only ones with a keen eye on the annuity marketplace. The U.K.’s Financial Conduct Authority (FCA) plans to continue its examination into whether British consumers are getting a fair deal when purchasing an annuity.
Earlier this year, the FCA announced it was undertaking the review. Recently, it published a paper based on input it gathered from various stakeholders, including regulated firms, consumer organizations and trade bodies. About 50 comments were received on a wide range of topics from publication of claims data on insurance products to publicly disseminated information on firms to transparency in the annuity marketplace. However, the report’s focus on the annuity market initiative garnered the most attention in published reports.
In the U.K., most pensioners purchase their annuities from their “host” pension provider. Yet several commentators noted in the FCA paper that consumers are often unaware they can peruse the open market for a potentially better deal. Greater transparency could improve that situation, as would comparison data and encouragement to seek professional advice, said supporters.
Conversely, opponents maintained that the main deterrent is not better information, but consumer “inertia” that could be remedied with education.
There was also some debate over the role the FCA should take in this effort, with some commentators saying it should work with other organizations like the Association of British Insurers (ABI) and the Pension Income Choice Associations.