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FSA: Annuity customers must be treated fairly
1 August 2008 12:00
There are still some flaws in the way annuity providers operate and they must resolve this issue or have it resolved for them, the Financial Services' Authority (FSA) has warned.
The FSA's review of the sector found that while most of the 55 annuity firms it looked at provided pension customers nearing retirement with clear information on their options, especially their right to shop around for an annuity, a significant minority did not.
Moreover, delays occurred in over 60 per cent of the 238 annuity transfer cases assessed, a failing that was attributed to the excessive complexity of the process and to the myriad of forms used in completing these handovers.
The firms involved have all received feedback and the FSA will now work with the sector to standardise and rationalise the transfer system, while Pension providers have until December to improve their literature and processes, or else face the possibility of direct action.
Sarah Wilson from the FSA explained that the decision of customers to stay with their existing annuity provider or switch to a new one can influence their retirement income and that poor communications or a slow transfer may cost them in this respect.
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