ELSA welcomes FCA consumer protection proposals for the UK secondary annuity market, but continues to warn that the market may not develop sufficiently to the full benefit of consumers.
The European Life Settlement Association (ELSA) supports the recent FCA proposals for protecting Annuity policy holders in the newly created market. However, ELSA believes that barriers to entry for secondary investors may result in less consumer choice and likely unfavourable outcomes for the elderly and vulnerable planning to cash in their annuity life savings.
The UK government plans to launch the Secondary Annuity Market in 2017 but ELSA warns that to progress, with key legislation and the regulatory framework due to be drawn up later in 2016, further changes are needed which are outlined in ELSA’s response published this week.
ELSA believes that the FCA consultation to define how the market will operate, providing protection for elderly and vulnerable consumers is important and to be welcomed. However, The FCA aim to encourage secondary investors to enter the market needs to be further refined to ensure effective competition in the new market place.
Alec Taylor, Chair of ELSA commented: “ELSA has extensive experience in the US Life Settlement and UK Traded Endowment Policy markets which is relevant to the establishment of an effective secondary annuity market. Whilst we welcome the consumer oriented protections the FCA are proposing, ELSA continues to have serious concerns regarding the openness of the market. There is a serious danger that the market will be closed to investors other than the original annuity providers. This will mean that product and service innovations are likely to be stifled. This will result in reduced consumer choice, and ultimately less favourable outcomes for annuity policy holders.”