This review assessed how firms provided information to customers, on a non-advised basis, about shopping around for enhanced annuities. The report presents the results of our review into customer communications and the actions we intend to take.
In our Business Plan 2014/15[2] (PDF) we said we would look at sales practices in retirement, and in our Business Plan 2015/16[3] (PDF) we announced a continuation of this work with the annuities sales practices thematic review.
In December 2014, we also published the results of TR14/20: Annuities sales practice[4] (PDF) which highlighted several areas in which firms could improve their overall practices. As a result, we asked the majority of firms who participated in that review to undertake a more detailed piece of work to assess a statistically significant sample of historic annuity sales. This would determine whether the weaknesses and failings we identified in relation to sales of enhanced annuities were indicative of a more widespread problem and/or may have led to poor consumer outcomes.
Who this applies to
Our findings will primarily be of interest to annuity providers and customers in receipt of annuity payments or approaching retirement. Consumer groups and trade bodies will also be interested in the themes explored in this report.
Next steps
We encourage firms to consider our feedback and take any appropriate actions to address the points we have raised.
We want firms to provide sufficient information to their customers about enhanced annuities through their non-advised sales. Specifically, they should make customers aware of their potential eligibility for enhanced annuities, and explain that they could shop around to potentially obtain a higher income from another provider.
We encourage any consumers (or their families) who have taken out annuities, and who may feel that they were given insufficient information regarding enhanced annuities, when they made their annuity choice, to contact their annuity provider.