The FCA’s review of enhanced annuity sales could see 90,000 customers receive compensation for misselling.
The regulator has confirmed that from its review of the annuity market released this morning, it can estimate that the number of customers in line for redress is approaching six figures.
As part of an investigation of 1200 non-advised sales at seven providers, the FCA found “no evidence of an industry-wide or systemic failure to provide customers with sufficient information about enhanced annuities,” but the regulator’s enforcement team is looking at “small number” of the firms after concerns were raised.
The FCA has asked firms who have “repeatedly failed” to provide sufficient information to customers about enhanced annuities to go back through their sales to identify those who are likely to be entitled to compensation.
The review says: “We will ask them to quantify that redress and compensate the customers accordingly.”
The FCA found that between 39 per cent and 48 per cent of consumers may have qualified for an enhanced annuity due to health or lifestyle conditions but only bought a standard one. The annuity income forgone for the average customer was estimated at £120 to £240 a year.
The ABI has since responded to the review playing down concerns over misselling.
“We are 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.”
The trade body added that the industry had been “focused on improving people’s experiences of making retirement choices in recent years”