The Association of British Insurers has raised concerns about the Financial Conduct Authority “cutting and pasting” earlier conclusions about shopping round for retirement income.
Rob Yuille, manager for retirement policy at the Association of British Insurers, said he was worried about the terms of reference for the regulator’s Retirement Outcome Review.
Mr Yuille backed the City watchdog's investigation into competition in the retirement income market and whether there is enough retirement income solutions, but said he is concerned by the focus on shopping around.
Speaking at the FTAdviser Retirement Freedoms Forum in London today (28 September), Mr Yuille said: “The FCA is looking at this through their Retirement Outcome Review. It is right to do so and monitor the market as it develops.
“Our concern is it has too narrow a focus on things like shopping around for drawdown and pricing.”
According to Mr Yuille there are other things the FCA should be looking at, like cash.
He said the regulator should not assume that stripping cash out of pensions is OK.
Mr Yuille said they should be looking at why there is demand for cash and what people are doing with it.
In his keynote speech at FTAdviser’s Retirement Freedoms Forum, Mr Yuille said: “I wouldn’t want them to copy and paste their assumptions about shopping around for an annuity and just apply them to drawdown.”
Back in December 2014, the FCA reported the annuity market was “not working well for consumers.”
The regulator reported people were missing out on a higher income by not shopping around for an annuity and many were unaware of their right to do so.
Mr Yuille said: “Drawdown decisions can depend on a range of things – guarantees, customer service, investments – and in the context of all of those, products and value for money. Annuity decisions are clearly more rate driven.
“Drawdown decisions are not a once in a lifetime decision. A lot of people do transfer once they are in drawdown. We would like to see these factors to consider filter into the review.”
The FCA did not immediately respond to a request for comment.