The Financial Conduct Authority has bowed to pressure from providers and changed the way it defines third way annuity products.
In the FCA’s report on pension freedom collection data, published in September 2015, which covered the data from June to April, the regulator defined third way annuities and products as ‘all products with some element of guaranteed minimum income’.
However, in response to feedback from providers following its first data request, the FCA has now confirmed it has changed this definition.
In its retirement income market data, which covers July to September 2015, the FCA defines third way products as those which include variable annuities, fixed term annuities, with profits annuities and unit linked annuities.
A spokesperson for the FCA told FTAdviser: “After feedback we received following our first data request we collected data on the sale of third way products slightly differently in order to gain a fuller picture.”
The spokesman highlighted there is no industry agreed definition of third way annuities and that different firms will have different views.
A spokesperson for Zurich said: “We are pleased the FCA has reviewed its definition of third way annuity products, which will help to more accurately reflect the number of customers selecting different options at retirement.
“We believe that customers will increasingly want to blend drawdown with different forms of longevity protection, and continued evolution of data definitions will be required to keep pace with market developments to ensure accurate insight is delivered. This clarification is a good first step in this direction.”
Carl Lamb, managing director at Norwich-based Almary Green said to FTAdviser: “It does make you wonder how they get it so wrong, is it a lack of understanding or not asking the right questions?
“It’s a jaw dropping moment. If regulation is supposed to be addressed round these points then where else does it go wrong?”
In November this year, providers expressed disappointment to FTAdviser over the way the Financial Conduct Authority’s recent pension freedoms data collection exercise categorised information surrounding ‘third way’ annuity products.
The collection data stated of the number of customers aged 55 or over, who have accessed their pension savings since 6 April, only 20 customers accessed products which bridge the gap between traditional fixed annuities and more flexible income drawdown contracts.
ruth.gillbe@ft.com
