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FCA criticises annuity providers Pension firms failing consumers, says FCA
(35 minutes later)
Competition in the pensions industry is not working well enough for consumers, City watchdog the Financial Conduct Authority (FCA) has said. Some pension providers are failing their customers, the Financial Conduct Authority (FCA) has said.
Its review of the pensions market found most consumers were missing out on a higher income from their annuity because they did not shop around.Its review of the pensions market found most consumers were missing out on a higher income from their annuity because they did not shop around.
It said many consumers were not "fully aware of their right to switch" to a different pension income provider. In particular, it said those who buy "enhanced" annuities were not being told about better value policies.
Consumers were also not encouraged to shop around for alternatives. Enhanced annuities are designed to provide a higher income to those with major medical conditions.
The FCA launched an investigation into annuity providers in February, It said some firms fail to tell customers with shorter life expectancy that they could get a better deal from a different pension provider.
The FCA said insurance companies would have to follow stricter rules on how they sold annuity pensions to ensure people were getting the best deal for their retirement income. The FCA launched an investigation into annuity providers in February, after finding that eight out of ten consumers who purchase an annuity from an existing provider could get a better deal on the open market.
The FCA also said insurance companies would have to follow stricter rules on how they sold annuity pensions to ensure people were getting the best deal for their retirement income.
It has made several recommendations, including requiring insurers to make it clear to customers how their quote compares with those from rivals.It has made several recommendations, including requiring insurers to make it clear to customers how their quote compares with those from rivals.
The FCA is seeking views on its initial findings and will consult at a later date if any potential rule changes are needed.The FCA is seeking views on its initial findings and will consult at a later date if any potential rule changes are needed.