Pension 'mis-selling' report due
The financial watchdog is preparing to publish a report into alleged mis-selling of retirement contracts by insurance companies.
Revelations of errors in the sale of annuities could open the floodgates to compensation claims, with up to 100,000 people a year estimated to have been sold inappropriate deals between 2007 and 2013, according to the Daily Telegraph.
Savers who successfully appeal against mis-selling could in some cases obtain pension increases worth thousands of pounds a year, the newspaper said.
A spokeswoman for the Financial Conduct Authority said: "We have been conducting a review of the non-advised annuities sales practices by pension providers, and expect to publish our findings later this year."
Non-advised sales are where the buyer does not use an independent financial adviser.
It is understood that the authority has been conducting a review of sales practices by pension providers to their existing customers, and wants to understand if these practices resulted in customers not being encouraged to shop around on the open market and if they did not get the right type of annuity.
The Telegraph said the scandal centred on the sales of annuities, a lifetime insurance contract, to savers in poor health who wanted to take an income from their pensions.
Studies indicated that many people should have received larger annuities to account for medical conditions such as high blood pressure or cholesterol, diabetes or because they smoked, it added.
There may have been widespread mis-selling before March, when Chancellor George Osborne announced that savers should no longer feel forced into annuity purchases, the newspaper said.
A Treasury spokeswoman said: "The FCA is currently running a review of annuities sales practices by pension providers. The Government will closely examine the full findings of that review when it is published later this year."
The Telegraph reported that Aviva had established 250 cases where savers were short-changed because agents failed to ask vital health questions.
The company said in a statement today: "We identified, as part of our normal review of customer policies, an error in the sales process for a small number of annuity customers.
"As soon as we identified this we put measures in place to address the matter. We are now in the process of contacting around 250 customers who were affected to ensure they are put in the same financial position as they should have been, had the error not occurred.
"The amounts of redress are relatively small but we recognise that this is important to our customers.
"Customers do not need to do anything, we will contact them if they are affected. We apologise to affected customers but they can be reassured that where we identify an error, we will always put it right."