FCA UK annuity review finds industry advice on right track

The UK’s financial watchdog the Financial Conduct Authority (FCA) has declared that it is satisfied overall with the general state of UK pension annuities advice, following a review. 

The FCA today published the findings of its thematic review of non-advised annuity sales practices. It said that wanted to establish whether firms provided customers with sufficient information about enhanced annuities.

The FCA looked at whether firms made customers aware of their potential eligibility for enhanced annuities and whether they encouraged them to shop around in order to potentially get a higher income from another provider.

The FCA reviewed non-advised sales of annuities made by pension providers to their customers between May 2008 and April 2015. The FCA looked at the information provided in respect of enhanced (sometimes called impaired life) annuities.

The FCA review looked at more than 1200 non-advised sales at seven firms which between them account for approximately two-thirds of the annuity market.

‘Clear and comprehensive’

In its statement the FCA said that it “found no evidence of an industry-wide or systemic failure” to provide customers with sufficient information about enhanced annuities through non-advised sales. The FCA also found many of the firms provided “clear and comprehensive information to customers” with written communication tending to meet the standards required.

At a small number of firms the FCA did have concerns when significant communications took place orally – normally over the phone – which was likely to have caused some customers to purchase a standard annuity when they may have been eligible for an enhanced product.


These failings were of sufficient concern at a small number of firms that they are now being asked by the FCA to review all non-advised sales from July 20081 and, where appropriate, provide redress; these firms are also being investigated by the FCA’s Enforcement Division to determine whether further action is necessary.

Megan Butler, director of supervision – investment, wholesale and specialist at the FCA said: “Annuities play an important role in providing an income for retirement. It is important that consumers get the right information at the right time in order to make the right decision for their retirement.

“While we have found particularly poor behaviour at a small number of firms, there is no evidence that firms have systemically failed to provide customers with the information required by our rules.  Firms, particularly those outside our sample, should look at the report we have published today and consider whether they can make improvements.”

‘Pleased but not surprised’

Yvonne Braun, director of long-term savings and protection policy at the Association of British Insurers (ABI), welcomed the findings saying that the ABI were “pleased but not surprised” that this “thorough and wide-ranging” review by the FCA found ‘no evidence of an industry-wide or systemic failure to provide customers with sufficient information about enhanced annuities through non-advised sales’.

“As the FCA points out, the information firms have given customers about enhanced annuities in the majority of cases has been timely, relevant and adequate and enabled customers to make informed decisions,” she said

“The industry has been focused on improving people’s experiences of making retirement choices in recent years and is working hard to ensure the Freedom and Choice reforms significantly improve customer engagement in pensions,” added Braun.

To read the FCA’s full report, click here.


Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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