Treasury and FCA plan three second-hand annuity probes

Treasury and FCA plan three second-hand annuity probes

A further three consultations on the secondary annuity market have been planned by HM Treasury and the Financial Conduct Authority over the coming months.

Although a review of the legislation was promised, no further details were given on the timing or scope.

More than five million people will be able to take advantage of reforms announced in December to allow people drawing retirement income from annuities to sell their contracts from 6 April 2017, in an extension of the pension freedom package first announced in the Budget of 2014.

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At the same time the Treasury announced its free guidance service Pension Wise would be extended to those participating in the secondary annuity market.

In February this year, pensions minister Baroness Ros Altmann revealed the government is thinking about some kind of “platform exchange” where people can bid for annuities.

Now, a spokesperson for the Treasury has told FTAdviser that the government plans two further consultations on the secondary annuity market.

The first of these is expected to take place in spring, focusing on regulatory permissions for firms who want to purchase annuities.

The second consultation is expected to take place during the summer, looking at the requirement upon some individuals to receive appropriate advice.

Additionally, a spokesperson for the FCA confirmed that there it will begin a consultation on the subject the week beginning the 4 April.

In December last year, the government tabled an amendment for mandatory advice for those with higher value annuities through the Bank of England and Financial Services Bill.

The amendment compels the FCA to make rules requiring certain authorised entities to check that holders of a relevant annuity have received appropriate financial advice before they may sell it.