The compulsory Code of conduct on retirement choices,
which was unveiled on Monday, aims to address figures showing that an estimated
third of people do not shop around for an annuity when they reach retirement.
According to the ABI, thousands of customers who could
qualify for an enhanced annuity, due to either medical conditions or lifestyle
choices, could also be missing out on income by buying a conventional annuity.
To address this, the code requires the ABI’s members to:
Provide ‘clear and consistent’ messages to ensure
retirees can make ‘informed and proactive’ decisions about retirement income
products, and can shop around for the best deal;
‘Prominently highlight’ enhanced annuities and the much
higher income they can potentially offer. They should tell customers if they
offer these products, and if not how they can find out who does;
‘Clearly signpost’ advice from both regulated advisers
and government-backed organisations;
Establish transparency in the annuity market so customers
have a clear picture of how individual providers’ offerings fit into the
While the code of conduct is now in force, ABI members
have until March 1 2013 to implement its requirements. The transparency
commitment will also be developed between now and the implementation deadline.
Otto Thoresen, the director general of the ABI, said the
code of conduct was a big step forward for customers are retirement.
‘Improved processes, better signposting and transparency
will combine to make customers more confident and more able to make decisions
about their retirement income.
‘This is not the end of our work helping customers to get
the best deal at retirement; we will continue to work with key stakeholders
including Government and the advisory community to improve the customer
experience,’ he added.
Mark Hoban MP, financial secretary to The Treasury,
welcomed the publication of the code, which he said would work alongside
government advice to help those approaching retirement to get the most out of
their retirement savings.
‘The announcement today, as an outcome of the work of the
OMO Review Group is an impressive example of industry, consumer groups and
Government working together with the ABI to deliver a package of measures that
will help consumers,’ he added.