The Financial Conduct Authority (FCA) has hit out at the pensions industry, claiming that some providers have questionable sales practices whilst others failing to tell customers about the better value deals.
The regulator says that as a result, less than half of people end up with the deal that’s best for them, and points to evidence of “mis-selling”.
According to the FCA, customers receiving product updates from pension companies when they are nearing retirement are sometimes put off from shopping around, by highlighting the cost of commission charges.
The regulator agreed that costs have to be taken into consideration; however the money saved by shopping around frequently more than covers the additional cost.
A further issue that concerned the FCA is customers are not being made aware of enhanced annuities on offer from competitors which offer better deals to people with heath issues.
Since the government announced changes to the pension rules that mean savers no longer need to buy an annuity, there’s been a big decline in annuity sales. But the FCA said that for people with average-sized pension pots, they can still provide good value.
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