Tuesday, 01 April 2014 12:00
Annuities aren't doomed, FCA boss tells MPs
A senior FCA figure has warned against predictions of doom about the annuities market following the radical pension reforms announced in the Budget.
Speaking to the Treasury Committee today Christopher Woolard, director of policy, risk and research, and a member of the FCA executive committee, said the Chancellor's changes do not mean annuities are dead.
Mr Woolard and FCA colleague David Geale, head of savings, investments and distribution, were grilled by MPs this morning and asked why the regulator took so long to review the annuities market.
Asked if the Budget reforms meant an end to annuities, Mr Woolard said: "I think we've got to be very careful about predictions of doom. I don't think the market is dead in that respect.
"I suspect we we'll see a range of innovative responses from the industry."
{desktop}{/desktop}{mobile}{/mobile}
He said there is already evidence firms are looking at different types of product to adapt to the changes.
In other countries where similar reforms have happened, he said there has not been a complete death of annuities. He said in Switzerland about 80% of retirees still buy annuities.
The FCA released a report earlier this year saying the annuities market was failing consumers but MPs said a lot of the conclusions were already widely known and probed as to why the regulator had not taken action sooner.
Mr Geale said the FCA had only recently been given competition powers but its thematic work has provided evidence that it is not working.
MPs said a year to wait for the FCA's competition market study results was too long.
The FCA pledged to carry this out immediately after its thematic review findings.
Regarding the study and how the Budget reforms may affect this, Mr Woolard said it would not be delayed.
He said: "It's still ongoing, we believe it's in some ways even more important that we conduct this work now."
However, some alterations are being made in the light of George Osborne's announcements last month.
Mr Woolard said: "We've modified some questions we might ask in particular where they may have been overtaken by events in the Budget."
Speaking to the Treasury Committee today Christopher Woolard, director of policy, risk and research, and a member of the FCA executive committee, said the Chancellor's changes do not mean annuities are dead.
Mr Woolard and FCA colleague David Geale, head of savings, investments and distribution, were grilled by MPs this morning and asked why the regulator took so long to review the annuities market.
Asked if the Budget reforms meant an end to annuities, Mr Woolard said: "I think we've got to be very careful about predictions of doom. I don't think the market is dead in that respect.
"I suspect we we'll see a range of innovative responses from the industry."
{desktop}{/desktop}{mobile}{/mobile}
He said there is already evidence firms are looking at different types of product to adapt to the changes.
In other countries where similar reforms have happened, he said there has not been a complete death of annuities. He said in Switzerland about 80% of retirees still buy annuities.
The FCA released a report earlier this year saying the annuities market was failing consumers but MPs said a lot of the conclusions were already widely known and probed as to why the regulator had not taken action sooner.
Mr Geale said the FCA had only recently been given competition powers but its thematic work has provided evidence that it is not working.
MPs said a year to wait for the FCA's competition market study results was too long.
The FCA pledged to carry this out immediately after its thematic review findings.
Regarding the study and how the Budget reforms may affect this, Mr Woolard said it would not be delayed.
He said: "It's still ongoing, we believe it's in some ways even more important that we conduct this work now."
However, some alterations are being made in the light of George Osborne's announcements last month.
Mr Woolard said: "We've modified some questions we might ask in particular where they may have been overtaken by events in the Budget."
This page is available to subscribers. Click here to sign in or get access.