New research from IRESS, the leading supplier of financial markets, wealth and mortgage management systems, has found that advisers would like to see increased shopping around for annuities via a mandated comparison process so consumers get a thorough overview of annuity rates available on the market before they buy.
In a spot poll of advisers, following the FCA’s Thematic Review of Annuities, over a third (34%) would like to see it become a requirement for pension providers to give consumers an overview of the best annuity rates available to them across the market. While just over one in four (28%) want to see the industry move towards greater early education of at retirement planning, 31% of advisers would like consumers to be given full responsibility for understanding the process of comparing rates.
The majority of advisers (64%) broadly welcomed the result of the FCA review in February. Of these, just over half suggested a positive outcome was that it highlighted the need for better options for consumers with smaller pots, whilst the remainder thought it would mean more consumers seek advice for their at retirement planning. Despite the positivity, 19% of advisers were frustrated that the thematic review hadn’t resulted in any action other than a new review, with 17% concerned it will undermine consumer confidence in the at retirement market as a whole.
Dave Miller, Head of Portal, IRESS UK, said: “Ensuring that consumers identify the best available annuity rate for them is crucial in securing the highest level of income at retirement. Introducing a mandated comparison process is a simple way of guaranteeing this and building customer confidence in the transparency of the market. Several providers already do it, but making it an industry norm, along with greater and earlier education of retirement planning, would be important steps to ensure the best outcome for those annuitising.
“The FCA is undertaking a further review, on competition in the annuities market, but it’s clear that many advisers would have preferred clarity on changes in the last review rather than waiting another 12 months. However, the question lies in what will come of it, and how advisers and providers will need to adapt to potential regulatory changes in 2015. The sooner there is clarity, the better.”
This comes following the FCA recently announcing that they will be undertaking a 12 month review of competition in the annuities market.
Results based on research carried out in February 2014.