Some insurance companies and pension providers confuse customers and charge high commisions.
That is the view of the Financial Services Consumer Panel, which works alongside the financial watchdog, the FCA.
The Panel, in a new in a report on the sale of annuities to people when they retire, have been heavy in their criticism of certain insurance companies and pension providers.
Retirees buy an annuity to provide an income from pension savings – and some 400,000 are sold every year. Sales are expected to double that figure over the next few years.
However, the report from the Financial Services Consumer Panel (FSCP) said annuity deals have become more complicated and many retirees are entering into them without taking advice.
The FSCP have stated that they have found some ‘high quality service’ but went on to stress that ‘the many examples of poor practice mean that the general outcome for consumers can be akin to a lottery.’
The FSCP has recommended a study of the market, to examine possible ‘exploitative’ pricing of annuities sold by insurance companies to customers who have been saving with them for a pension.
It also wants to look at hidden charges that make it difficult for consumers to make an informed decision.
“We urgently need to reform this market, particularly for those with smaller pension pots, who usually can’t get independent advice,” said Sue Lewis, chair of the FSCP.