MSE News: Annuity sales practices failing pensioners, says FCA

kidmugsy

jamesd wrote: »

they have been told that they have to buy an annuity to take a lump sum..

I don't see that lying is a business for regulators and codes. Lying is fraud, and it's business for the police. A bit of salutary jail time might be more effective, and less economically damaging, than a vast and billowing bureaucracy.

jamesd

I've no objection to the use of time in prison as part of the regulatory structure. If the sentences were imposed and changed behaviour there would be less need for other regulation.

Meanwhile lots of consumers do need educating and the companies are required to do at least some of that educating, while not deliberately exploiting ignorance or inertia.

bmm78

jamesd wrote: »

It appears to me that the FOS have not been applying the FCA's guidance and that more work between the two of them would be appropriate so that the FOS does rule against firms that say breach the ABI code, whether in writing - where the FCA noted the information tended to be good - or in calls to complete sales where it found many troubling things.

In effect what appears to have often been happening is using correct paperwork to mask incorrect sales practices at the end of the process.

None of that comes close to justifying the apparent discrepancy between FOS decisions viewable to the public, and the tone of the findings of the FCA thematic review.

A slight statistical anomaly can be explained by differences in interpretation of rules and guidance. A wholesale retrospective interpretation of previously compliant cases as "mis-selling" (if that is indeed the path we are leading to) means that there has been a serious breakdown in regulation somewhere along the line.

"Correct paperwork" is correct paperwork - the right information is either there or it isn't. The implication that insurers are using jedi mind tricks to force people to buy poor value annuities is absurd.

The simple truth is that a significant number of people do not fully engage in the buying process, for a wide variety of reasons. This leads to poor customer outcomes.

jamesd

I agree that lots of people don't engage. Pretty much the opposite of me.

I think there has been a serious failure of regulation, not limited to just the issues of firms that aren't ABI members.

The FCA did express the view that jedi mind tricks had been used, though not with those words. Things like placing emphasis on charges of seeking advice or shopping around to discourage people from doing that.

So long as firms have big variations in open market option use and no issues like GARs to explain it, that's a smoking gun in the hands of the firms with the low OMO rates and a clear indication to the regulator that there's a problem to deal with.