The U.K. Financial Services Authority has begun an investigation into whether consumers buying annuities are getting a fair deal.
The FSA will conduct a pricing survey and review the availability of policies, it said in a statement today. The regulator may also probe whether companies selling annuities hinder consumer choice.
Annuities sold by life insurance companies guarantee fixed payments over a specified period of time. They are commonly used by retirees who can use their pensions to buy an annual income.
“An annuity purchase is an important one-off decision that has long term consequences for individuals if they get it wrong,” Nick Poyntz-Wright, the FSA’s head of life insurance, said in the statement. “We want to understand the level of the potential detriment for consumers if they do not shop around.”