Call for specialist qualification for secondary annuities

Call for specialist qualification for secondary annuities

Advisers wishing to advise on the secondary annuity market should be required to obtain a specific qualification, according to life company Aegon.

The call came after the Fincancial Conduct Authority announced it was consulting on whether to require equity release advisers to obtain such a standalone qualification.

Rules allowing annuity-holders to sell their annuities for a lump sum are due to come into effect in April 2017.

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Treasury and the FCA have yet to provide all the details of the market, in particular at what threshold annuitants will be required to seek advice.

But even with this lack of detail, many in the industry have expressed concern that it will be a complicated, poor value, and pontentially harmful market for pensioners.

Steven Cameron, pension director at Aegon, said for the market to work effectively most annuitants would need to seek advice.

“In fact, the Treasury will require those with substantial annuities to first obtain advice and quite rightly so as giving up a guaranteed income for life is a particularly serious decision with huge challenges for consumers to assess if they are being offered a fair price.

But he said there were “no signs” of advisers rushing to offer advice in this new market branded “particularly risky”, and with a “disproportionate number of vulnerable customers” by the FCA.

“Advisers quite rightly will be looking for regulatory clarity making it essential that the FCA and Financial Ombudsman Service make their expectations clear so advisers can be confident they won’t be judged with the ‘benefit’ of hindsight,” Mr Cameron added.

He said a standalone adviser qualification along the lines being considered for equity release was one way to do this.

“There are similarities between secondary annuities and equity release as in both cases an individual is selling a future entitlement for a lump sum today. In fact, should anyone considering selling their annuity consider the alternative of equity release, and vice versa?”

Formerly an annuity provider, Aegon sold its entire annuity book this year to Legal & General and Rothesay Life.