Consumer Panel research reveals potential gaps in regulation for people using their savings in later life

30 July 2009

The Consumer Panel has today published research which reveals areas of potential detriment for financial products for those looking to spend their savings gradually in later life.  The following were particularly highlighted:

• New-style annuities – and particularly the ability of advisers to deal with the growing complexity of products on offer;

• Risks and costs of structured products – where asymmetry of information, high charges and the overall complexity can lead to the possibility of misselling;

• Provision of information, guidance and advice – where there is a question about the capability of older individuals to understand the implications of the decisions that they might/might not take.

The research was commissioned by the Consumer Panel to identify potential gaps in regulation. It is concerned that there are several different organisations responsible for the regulation of the market for financial products for later life and that there is therefore a risk that regulators may not take a holistic approach.  These are products for what has been called the decumulation stage of life – after people have accumulated savings during their working life.

The research covered five areas – decumulation activities (including pensions, annuities and equity release); saving and investment; banking; protection; and information and advice. For each type of product, both the probability and materiality of consumer detriment were considered, as well as the relative size of the markets.

Adam Phillips Chairman of the Panel said:
“It is crucial that people who have worked hard to save for their retirement are able to get appropriate advice and buy financial products which are value for money to sustain them into old age.  We will use the findings of this report to focus our work and to engage in constructive dialogue with the FSA and organisations working with people in later life.”

Notes to editors

1. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives.  The Consumer Panel has statutory status.  

2. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. What we're doing for consumers explains more about the work the Panel is doing.

3. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.

4. There are currently ten members of the Panel as listed below (for further information on individual members, see Who is on the Panel)

   Adam Phillips (Chairman)
   Kay Blair
   Michael Chapman
   Stephen Crampton
   Caroline Gardner

   Tony Hetherington
   Nick Lord
   David Metz
   Lindsey Rogerson
   Carol Stewart