Annuity providers will be forced to tell consumers how much they could gain from shopping around before purchasing an annuity, due to new rules proposed by the Financial Conduct Authority (FCA).
The annuity comparator, which is scheduled to take effect in September 2017, aims to tackle the longstanding problem of consumers failing to seek quotes from different annuity providers before they buy an annuity. Not shopping around often leads to a poorer income rate than they could get. The FCA has found that 60 per cent of consumers were not switching providers when they bought an annuity, but up to 80 per cent of these could have got a better deal on the open market.
Under the new system, providers will be required to show customers the difference between the provider's own quote and the highest guaranteed quote available on the open market. They will also need to display other information including the net annuity purchase amount, whether the annuity is guaranteed, single life, joint life or inflation-linked, and information on how to shop around.