FCA annuity probe ‘must include commission’

FCA annuity probe ‘must include commission’

The FCA’s probe into annuity mis-selling must go ‘far’ beyond whether clients would have been better served with an enhanced or standard annuity, Jamie Smith-Thompson has said.

The managing director of Kent-based Portal Financial called on the regulator to address in its review, which was launched in September, include the provision of enhanced commission rates by some companies – which conflict with the principles of RDR – and whether there was any market abuse with preferential and volume-based commission payments.

Mr Smith-Thompson said: “We hope that the FCA investigates issues such as commission bias and commission paid in other ways.”

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He added that annuities should continue to play a part in some pensioners’ retirement planning.

Adviser View

Stephanie Pickering, financial planner at Tyne and Wear-based Verity Wealth Management, said: “How can annuities be mis-sold if people have not taken any advice? People do not understand the difference between advice and information.

“People generally go with what has been provided by their holding company, which will present them with their options at maturity, or tell them to go and seek advice.

“Most clients will stick with it, believing they are getting advice. This is continuing post-RDR, and the only way to stop it is to say that you cannot have an annuity without independent advice.”