The stranglehold traditional annuity providers have on the market is making a mockery of the principles of treating customers fairly.
All the while the drive to encourage the widespread take up of the open market option will remain a pipedream if clients continue to incur a loss of income thanks to inexcusably long delays in transferring funds.
It should go without saying that customers should be treated fairly throughout the time they hold a policy with a provider, and that should include the point at which the client decides to move his or her money elsewhere. Sadly, the behaviour of most product providers leads you to believe that clients looking to transfer their annuity funds from one provider to another are viewed as no longer being worth the ‘hassle’ of a fully TCF compliant service by the first provider.
I have witnessed some appalling tactics employed by companies to keep hold of clients’ money. Most tend to be very good at accepting new business but when it comes to transferring funds out, in the bulk of cases they are awful. Clients are being seriously disadvantaged. When you consider that a typical annuity quote is only held for 10 working days and incumbent providers are taking anything up to 20 weeks to transfer assets it means clients are missing out on the best rates and losing out on income.
This has been going on for far too long; delays in fund transfers have reached a critical point and it is time for the regulator to step up, bare its teeth and take the providers of such lamentable service to task – and to do so publicly. The Financial Services Authority needs to force providers to speed up the process and where they don’t they should be imposing swingeing fines. If it were IFAs treating their clients this badly the regulator would have rightly barred them from trading. It names and shames IFAs who have been found to be wanting, so why not also the big providers?
As an industry we should be calling on the Financial Services Authority to impose a strict time limit on the transaction and it should start penalising those companies who fail to deliver. It should also ensure that those clients who have lost out because of unacceptably long transfer delays are properly compensated - anything less would be in contravention of the spirit of TCF. Treating customers fairly should be enshrined principle across the whole of financial services, and not just advisers.
Sheriar Bradbury is managing director at Bradbury HamiltonIFAonline
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