Aviva may explore offering competitors' products

The annuity pensions provider said it wanted to ensure its existing customers were always offered the most appropriate source of retirement income, even if this meant recommending competitors' products to their internal clients.

Darren Dicks, head of annuity marketing for Aviva, said 70 per cent of annuity pots were less than £30,000 and this did not leave much to play with when getting financial advice.

He said: "In my mind that is the biggest issue in this market - how to offer choice and competitive rates when pot size is not economical for the normal advice process."

Mr Dicks said while there were some solutions, such as flexible commission, this was not the right answer for everyone as it could deplete the annuity pot.

For those living on a £30,000 annuity pot, which amounted to about £1,500 a year, every penny counted, so paying for advice was not always an option, he said.

Mr Dicks said: "I think the answer is a very robust streamlined process to inform customers about their choices."

When asked how this could be achieved Mr Dicks said: "We cannot give an answer yet, but we have not ruled out offering other competitors' products. We have got lots of options, we could link with an IFA firm, link to a third party or link to a bank - there are lots of options."

Mr Dicks said offering the most appropriate annuity was a "huge issue" that Aviva was taking very seriously.

Providers needed to offer customers enough information to make the right informed choice, he said, and while Mr Dicks said he felt Aviva's rates were often the best for its internal customers he believed in some cases they were "just ticking the box."

He said: "There will doubtless be sometimes when the customer would have got a better rate elsewhere. We are looking at how to offer customers more choice and the most appropriate solution."

Daniel Clayden, director of Devon-based IFA Clayden Associates, said he had concerns about providers offering competitors' products as it could be seen as stepping on the toes of IFAs.

He said: "My opinion is all that pension providers should really do is lobby annuity providers to have lower minimum sum values because that is probably the biggest stumbling block when it comes to people taking up the open market option."