The Financial Conduct Authority has proposed telling providers to produce an annuity quote for clients who refuse to provide health information.
As part of its Quarterly Consultation, the FCA has proposed a change in rules which mean annuity providers do not have to produce a quote for consumers that refuse to answer questions about their health and lifestyle.
The regulator now wants providers to offer these consumers a market-leading quote so that it can be compared on a non-enhanced basis.
A standard annuity is a product that pays a regular retirement income – usually for life – using money from an individual’s pension pot but an enhanced annuity pays a higher level of income than a standard annuity due to an individual’s health and lifestyle conditions.
In the document the FCA stated: “We take this view because these consumers may still be able to get a better income from their annuity – or a better-priced annuity – if they shopped around. So, there is clearly still value in giving the consumer a market-leading quote.”
The FCA expects firms to comply with this rule change by January 1 2020 but has encouraged providers to comply by November 2019, as some providers are already preparing to offer market-leading quotes in these circumstances.
It estimates that the cost to the annuity industry will be £255,000 as IT systems will need to be updated and staff will need to be trained.