A Conservative MP has warned annuities could become the next financial services mis-selling scandal without an urgent and radical overhaul.
Gloucester MP Richard Graham said consumers fail to fully understand the annuities products available, and that many were not clear about the fees they would have to pay, the Daily Mail reports.
Speaking during a Westminster Hall debate, he said: "Since this is potentially the second biggest financial purchase of our lives, I believe the state of things is worrying."
Graham said he had recently chaired a seminar on annuities during which he asked the Association of British Insurers if there was a danger of any of its members being sued for mis-selling.
"There was a long pause before the answer came: 'Not yet'", the MP said.
He also revealed that, during a discussion with a pension annuities adviser, he was told: "You will never be able to work out what the charges are."
He said: "It is therefore not surprising that the Financial Conduct Authority Consumer Panel has recommended urgent regulatory and government-led reform in order to protect and benefit millions of our constituents."
The Tory MP said that, as a definition of a good-value annuity was ‘elusive', MPs owed it to their constituents to call for greater transparency so they knew what they were being charged.
He said: "The annuities market is no longer working for large numbers of people in this country. It needs to be reformed and, if it is to be useful, then that reform should be welcomed by everybody in the industry because otherwise annuities will not have a new role to play in financial planning in the future.
"The opaqueness of this market stands in stark contrast to the increasing amount of light being shone on the pensions industry as a whole and therefore is more of anomaly."
Graham called for action on annuities over the remaining 18 months of this government.
First mentioned in Cridland Report
Second acquisition of 2019
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