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The Financial
Services Authority (FSA) has called for the fair treatment of annuity
customers following a review of the quality of provider literature
and alleged delays in the transfer of annuity funds.
The FSA found that more than 60 per cent of the 55 annuity firms
assessed provide clear information to pension customers approaching
retirement age to enable them to make informed decisions about their
retirement options. However, a significant minority of these firms
provide material that the FSA says fails to meet their requirements.
Delays were found to have occurred in over 60 per cent of 238 annuity
transfer cases reviewed.
All firms involved have been offered individual feedback, and the
FSA will also be working with the industry through the Association
of British Insurers (ABI) to avoid delays and reform the overall
transfer process.
The review is linked to the FSA’s concept of Treating Customers
Fairly (TCF), and the firms affected must make the improvements
to their literature and processes by the regulator’s TCF deadline
of December 2008.
Sarah Wilson, director of TCF and insurance sector leader at the
FSA, said that the decision on whether to buy an annuity from a
current provider or to switch to another insurer on the open market
could influence an individual’s lifetime income: “Poor
communications from insurers may result in people making poor decisions
or failing to take any action to maximise their retirement income.
At the same time, if a consumer decides to exercise the open market
option, they can suffer if fund transfer does not happen in a timely
manner.”
- Pensions Age
July 2008
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