Plans for a secondary annuities market were given the green light by the Government this morning, with more than five million people set to sell their annuity from 6 April 2017.
But the Treasury warned that advisers wishing to help clients in the new secondary market might be forced to take a new exam before doing so.
Annuity holders wishing to sell will be required to seek independent financial advice for annuities above a certain threshold.
The Treasury report today said: “Advisers are expected to benefit from an increased demand for their services because of the financial advice requirement for some annuity holders.
“However, there may be a requirement for advisors to take part in additional training or earn new qualifications to work with customers looking to sell their annuity.”
Andrew Tully, pensions technical director at Retirement Advantage, said: “It is good to see a compulsory advice safety net being introduced to provide protection and help people from making poor decisions. It remains to be seen if advisers have the appetite to get involved in this business.”
Should advisers get involved with helping clients sell their annuities?
— FP Today (@FPTodayNews) December 18, 2015
The Treasury paper pledged “appropriate support” and said the government would be expanding Pension Wise to cover all those who hold annuities.
The Treasury report stated: “For those with an annuity above a certain value, the government will put in place a financial advice requirement to make sure they have the support to make the right decision.
“The government will work closely with the FCA to consider how this will work in practice. The FCA will also consult on other measures that are designed to both protect consumers and promote competition during 2016.
“We are confident that with the support of insurers, intermediaries and purchasers, the secondary market for annuities will develop in a way that best suits the interests of retirees.”
Yvonne Braun, director of long-term savings policy at the Association of British Insurers, said: “As the Ministers have pointed out, for most people sticking with an annuity will be the right thing, and selling one should not be done rashly.
“It’s therefore essential we see Pension Wise guidance made available to cover this future market, and we support the extension of the requirement that customers get financial advice when the value of their annuity is above a certain level. Getting the framework absolutely right to provide protection to consumers will be crucial if we are not to store up significant problems for the future, and providers and the ABI will continue to work hard with the FCA and Government to achieve this."