FCA may add annuities to £1 trillion savings market probe

The Financial Conduct Authority has said it may launch a probe into annuities following its 'market study' into the £1 trillion UK cash savings market announced today which will look at whether consumers are getting a good deal. The cash savings study will be part of a programme in which the FCA will look across financial services markets and assess whether or not competition is working effectively for consumers.The FCA says the market studies will enable it to take a holistic look at competition in a market, assessing how consumers and firms behave and interact. As part of this programme, the FCA will consider whether a market study is required on annuities once the thematic review on the subject concludes towards the end of the year.The FCA says it will also invite evidence early next year as part of a "Wholesale Strategic Review" to look at the way competition works between firms in financial services to ensure that consumers get a better deal.The FCA is already undertaking a thematic review into annuities and the impact for consumers if they do not shop around for the best rate. This was announced by the Financial Services Authority in January and will conclude in early 2014.{desktop}{/desktop}{mobile}{/mobile}The cash savings probe will look at a range of issues including the effects of 'teaser rates' (introductory interest rates offered to new customers) and how often consumers switch their savings accounts. Over 80% of all adults in the UK have some sort of cash savings account, says the FCA, so the FCA is keen to assess what it can do to ensure firms offer consumers the best returns possible and information that meets their needs.Savings rates have slumped in recent years as the base rate has stayed low and banks and building societies have been less reliant on retail savings for loan funding.FCA chief executive Martin Wheatley said: "Promoting effective competition and ensuring that markets work well for consumers is a key objective for the FCA."We will be undertaking a programme of work and research that will enable us to have a better understanding of how the markets are working and the dynamics that drive both them and the decisions that consumers make."In looking at cash savings, we will examine an area that affects most people and see if there is action we need to take. This is exactly the sort of area I want the FCA to be operating in."We know that switching rates are low for financial services products and savings accounts are no exception. Even when people do switch their accounts, they are twice as likely to go with their existing provider than move to the offering of a competitor."

FCA may add annuities to £1 trillion savings market probe

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