Lee Clarke, a partner at PwC, said:
“The market study demonstrates the FCA’s ongoing concerns about the retirement space, something which is even more important as the market develops in response to the new pension freedoms from April 2015.”
The key points of the study are:
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Competition is not working in the market and behavioural bias prevents customers getting the best outcomes
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The quality of communication to customers needs to be better, especially as savers’ decisions will become even more complex post April 2015 and they will need more support from their pension providers
Lee Clarke continued: “The FCA’s occasional paper, published alongside the market study, is especially interesting. It sets out the FCA’s thoughts on value for money. The regulator is showing the importance of value for money and how this relates not just to the same product but to the wider market.
“Of more immediate concern for some firms is the FCA thematic review into enhanced annuities, also published today. The FCA is making a number of insurers involved in the review look into their annuity sales going back to 2008.
“This could be a very costly exercise for insurers, both in terms of the complexity of contacting customers and if redress is due when adequate information was not available to customers.
”All firms must ask themselves – do I have the resources and capability to conduct this review to the FCA’s satisfaction? For some firms this will be very challenging.”
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