A Financial adviser has warned of a future misselling scandal in the annuities sector.
Bob Bullivant, chief executive of Annuities Direct, says he is becoming increasingly concerned about the launch of ‘open market option services’ which are not offering a full whole of market broking service.
Bullivant says careful analysis of the existing arrangements needs to be considered and products other than annuities need to be included in the whole of market service.
Pointing to a trend in the market, where providers and some advisers restrict the number of product providers they use and pass this off as a broking service, the company says this service will typically offer just one or two enhanced providers and one normal rate provider.
Annuities Direct claims this denies the client the opportunity to obtain the absolute best rate from across the whole market.
“These services are dangerous and could lead to yet another misselling scandal,” says Bullivant.
The company also claims these services are forcing the client along the route of purchasing an annuity. It says more options are now available and the need to consider the whole market has never been more relevant adding: “the desire of providers to pigeon hole people is dangerous and could lead to people buying an inappropriate product”.
Bullivant is calling on the FSA to make it clear that its pension switch rules also apply to the open market option.
“Conversion of a pension fund is probably the largest transaction a client will make next to house purchase. It needs careful analysis of the existing arrangements and then a full whole of market service to include products other than annuities,” Bullivant adds.
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