Consumer Panel renews call for non-advice code of conduct

14 February 2014

The Financial Services Consumer Panel welcomes the publication of the Financial Conduct Authority’s (FCA) thematic review of annuities. The FCA’s findings echo our own¹:

• the market does not work well, especially for the most vulnerable customers: those with smaller pension pots and those who could qualify for enhancements due to health conditions;
• firms that sell annuities via non-advice websites often provide misleading or incomplete information to consumers; and

  more needs to be done to ensure people get the best pension they can.

The Panel appreciates the complexity of this dysfunctional market and welcome a full market study, including a review of pension providers’ pricing, selling practices, and retention strategies.

While more work is needed on aspects of the market, the Panel believes the FCA should act immediately to introduce a robust code of conduct for firms selling annuities on a non-advised basis.

Sue Lewis, Consumer Panel Chair, commented:

“People only have one chance to make the right choice when buying an annuity. The decision is harder to make when the market doesn’t work, and the FCA has shown that it doesn't. The number of people buying an annuity through non-advice websites is growing rapidly. Yet the FCA found that, of 13 websites which let people compare annuity rates and buy directly, none provided adequate and clear information to consumers. The Panel recommended a code of conduct for non-advice websites and introducers, we would like to see this introduced without delay. The issue of small pots also needs attention, given the poor deal those with the smallest amount of savings get. This goes beyond regulation: Government has a role to play here too.”

Notes to editors

1. The Panel’s Annuities research issued in December 2013 can be found here[1].
2. The Consumer Panel is a statutory body under the Financial Services Act 2012. It was initially established by the Financial Services Authority in December 1998. The Panel advises the FCA on the interests and concerns of consumers.
3. The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.
4. The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit.