The managing director of a Financial Planning firm fears there will be serious risks attached to the new second hand annuities market and said it must come with a  warning.

Martin Bamford CFPCM Chartered MCSI, from Informed Choice in Surrey, has highlighted potential problems with the policy after the Government gave it the green light this week.

He fears that advisers will be looked at as a quick route to getting hold of the cash from 6 April 2017 when the estimated five million people will be able to sell their annuity.

Annuity holders wishing to sell will be required to seek independent financial advice for annuities above a certain threshold. Read more on this here.

He said: “Extending the pension freedoms to annuities makes sense, theoretically at least. In practice I can see very few scenarios where this will prove to be a suitable course of action for clients.

“There is a big risk that consumers could lose value at each stage of the process, with charges and taxes to consider.

“I already fear that advisers will be seen as a route to accessing cash, as they are often seen for members of deferred final salary pensions, who need a declaration signed to evidence they have sought advice.

“Those who have been approaching us this year with that request are nearly impossible to convert to clients who are engaged with the Financial Planning process, as they are single-minded in their determination to access cash at all costs.”

Mr Bamford said: “The second hand annuity market needs to come with a big wealth warning and advisers will need to act responsibly if they are approached by consumers looking to cash in.”

The Treasury also revealed this week that advisers wishing to help clients in the new secondary market might be forced to take a new exam or “additional training” before doing so.