Watchdog slammed for lack of action over annuities

Anyone looking to secure a retirement income is likely to miss out on the best option, reports Simon Read

The Financial Conduct Authority has come in for severe criticism after failing to sort out the annuity scandal that leaves hundreds of thousands of people out of pocket every year.

The row blew up yesterday after the FCA admitted that the annuities market was not working. After an extensive review it said it would launch a competition market study to find out why consumers don't shop around.

But Andrew Tully of MGM Advantage said: "The review doesn't go far enough, or act quickly enough. This will potentially leave many thousands of retirees high and dry when navigating the annuity minefield."

Pensions expert Ros Altman said: "We need immediate action as more than 1,000 people every week are buying annuities and the transactions are irreversible."

Malcolm McLean of Barnett Waddingham said:"It is disappointing that we will have to wait many months more for a second-stage investigation by the FCA before regulatory action of some description can be initiated.

"The purchasing of an annuity is effectively still a one-chance opportunity. Consumers must consider that while a difference of say £30 a year between annuities may not seem very much, if they multiply this by 20 to 30 years the losses in retirement income can add up to a significant amount of money."

Annuities convert pensions pots into a retirement income, but the Watchdog's report suggested that four out of five consumers could get a higher income by shopping around.

Consequently the market is "disorderly", according to Martin Wheatley, the FCA's chief executive.

"Once you've bought an annuity you can't change your mind but for most people getting the right one could mean the equivalent of an extra £1,500 in savings," he pointed out. "So we need to understand why they aren't shopping around and switching."

Many believe the problem is the pension companies that sell annuities not doing enough to explain to people that can can shop around.

Martyn James of the Financial Ombudsman Service said that if pension firms explained how an annuity works and what they are, many complaints the FOS receives could have been avoided.

The study will examine how annuities are sold. The FCA said it would publish its initial findings in the summer and a final report within a year.

Independent Partners: 10 top tips for retirement. Get your free guide here

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there