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If You Walk Down the Road… February 15, 2015

Posted by Audit Monkey in The Joy & Pain of Internal Audit, The State of the British Nation.
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There was an interesting article in ‘The Times’ published on 12 December 2014 (yes, I know, I’ve been laxed)

detailing how pension providers will have to tell savers how well the quote they are being offered by their existing provider compares to others in the market. This reform is being proposed by our good friends, the FCA. The FCA has found evidence that savers were missing out on better deals because they were not shopping around. The FCA was keen to consider a new system to notify customers of their savings products in one place. To put the wind up customers, the FCA warned of another mis-selling scandal arising from the restructuring of pension products, e.g. withdrawing accrued pension monies rather than compulsorily purchasing an annuity, and poor advice.

My regular readers will know what’s coming. In what other industry do you walk into a store to be told by the proprietor that you could purchase the same product at a cheaper price but would give you enhanced benefits if you walk down the road? In short, none. I’ve never walked into a Ford dealership to be told that if pop into Honda they will provide me with a more favourable and cheaper products.  So what does the Regulator expect?; that your pension company is going to collect data from across the market for other providers? It’s not insurmountable but it would be another cost to the business which would probably reduced your annuity due to increased admin costs rather than improving industry competition. And to warn of potential mis-selling just smacks of the Regulator justifying it’s existence. Note, I’m not an actuary but perhaps this is case where Regulatory intervention would hinder the industry rather than improve.

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Comments»

1. ITauditSecurity - February 17, 2015

If governments would allow people to make their own decisions and allow them to deal with the outcome of those decisions, both the government and the people would be better off.

2. itmonkey101 - March 12, 2015

I’m usually inclined towards governments and regulators keeping their noses out but annuities are such scandalously poor value that something has to be done. Unfortunately this initiative smacks of “something must be done” rather than a constructive attempt to improve this state of affairs. Ho and indeed, hum.


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