Another misselling scandal has been prevented after the ticking ‘timebomb’ of annuity re-sales was defused.

That was the take of David Newman, head of pensions at Close Brothers Asset Management, who was among industry experts welcoming the Government's decision yesterday to axe the proposed new market.

It had been scheduled to start next April.

Ros Altmann attacks decision to bin annuity re-sales market

Mr Newman said: “A secondary annuity market had the potential to be the next big misselling timebomb, given the sheer scale of consumer protection issues it would generate.

“Ultimately this about turn from the Government means less flexibility for the small minority that would have benefitted from the ability to sell their annuities, but given the level of education and advice that would be required to make the launch possible, common sense has prevailed.”

But several underlying issues remain unresolved, he said, not least, how those who have already annuitised can also enjoy the same pension freedoms as those who are now retiring.

Andrew Tully, pensions technical director, Retirement Advantage, said: “This felt like a step too far in extending the pension freedoms. It was always going to be difficult to find a way for consumers to get good value from trading a lifetime income and ensure they were protected from a poor outcome.”

Rob Yuille, ABI head of retirement policy, agreed there were “considerable risks for customers, including from unregulated buyers”.

He said: “This is the right decision for the right reasons. The ABI has highlighted the challenges involved and worked constructively with the Government to try to solve them, but consumer protection has to be the priority.”

Martin Tilley, director of technical services, Dentons Pension Management, said: “There will be many annuitants who will be very disappointed by this decision as since it was initially raised by Steve Webb, many of them will have seen it as an opportunity to release themselves from the shackles of the annuity rules.

“However, as the industry predicted and the Government have now agreed, the need to ensure consumer protection was likely to result in too many barriers and potentially costs being imposed making a secondary sale unviable.

“Sadly, some organisations will have spent resource time and money in trying to make this work and this money will have been wasted. Other individuals may also have put decisions on hold pending the creation of the market, which might also have resulted in bad consumer outcomes.

“A key message to be learnt from this is that proposed changes and even kite flying of ideas on major changes of policies like this should not be released to the public without a prior closed door consultation with expert bodies who could have identified barriers to implementation so that consumers do not have false expectations of what may or may not happen.”

More reaction here