The Financial Conduct Authority (FCA) has highlighted concerns that people who sell their annuity on a secondary market will be unaware of the impact on any benefits they receive.
Last month the FCA released a consultation paper which set out its regulation for the second-hand annuity market which is set to launch in April 2017.
The paper pointed out that people who rely on means tested benefits may be ‘vulnerable’ on the second hand annuity market.
Speaking at an Engage Insight event in London, FCA strategy manager Alex Roy (pictured) said the regulator wanted to go further with this point in the paper.
‘There is some uncertainty around means tested benefits. We would have liked to go further in helping people understand if they sell their annuity, what the impact will be for their means tested benefits,’ he said.
‘Unfortunately the reality of means tested benefits is they are judged on a case-by-case basis, so it’s not something we can give more certainty over. All we can do is make sure everyone is informed that they need to think carefully before they make these decisions.’
Roy said there were a number of ‘significant risks’ in the secondary annuity market but the regulator was concerned about overburdening potential buyers with regulation.
‘That’s a really tricky balance and this one has been a really tricky policy to design,’ he said.
Source: New Model Adviser