Policy paper

Mandatory Advice for Secondary Market in Annuities

Published 9 December 2015

This was published under the 2015 to 2016 Cameron Conservative government

© Crown copyright 2015

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1. Mandatory Advice for Secondary Market in Annuities

The government is today tabling an amendment for mandatory advice for those with higher value annuities through the Bank of England and Financial Services Bill.

The amendment will:

  • compel the FCA to make rules requiring certain authorised entities to check that holders of a relevant annuity have received appropriate financial advice before they may sell their annuity

  • provide the Treasury with delegated powers to determine what a ‘relevant annuity’ is, including what the threshold should be, how it should be calculated and whether it should take into account an individual’s circumstances

  • give the Treasury delegated powers to specify what is meant by appropriate financial advice

The government will in due course consult over secondary legislation setting how details of how the advice requirement will operate – including threshold criteria.

This legislative approach is consistent with the approach used for the advice requirement for individuals considering whether to transfer from Defined Benefit to Defined Contribution pensions, as set out in the Pension Schemes Act 2015.

The government’s introduction of an advice requirement is separate from the ongoing joint government – FCA Financial Advice Markets Review (FAMR), which will report in the spring.

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