Insurance companies have often been accused of exploiting consumer inertia to sell their customers uncompetitive pension annuities at retirement, so giving them poor value.

For years, criticism of insurance companies from across the pensions industry has been mounting.

According to Hargreaves Lansdown, the FSA is now losing patience with the insurers and is issuing a newsletter expressing disappointment with insurers’ failure to meet regulatory standards.

The FSA has also told insurers that there is significant potential for customers to achieve higher incomes by exercising their right to shop around using the Open Market Option (OMO).

Coincidentally, the insurance company’s lobby group, the Association of British Insurers (ABI), has this week released research concerning OMO suggesting that all is well. They report that consumers are being well served by the system and that the majority are enjoying good value from their annuity purchases.

Nigel Callaghan, pensions analyst at Hargreaves Lansdown, says, ‘These claims fly in the face of the experience of most annuity specialist brokers dealing with thousands of annuity cases each year and we believe they will be directly contradicted by the FSA.

‘Enough is enough. These investors have been saving with the insurance companies for 20 to 30 years in many instances. The least they should expect is to be treated fairly. Offering them such poor value at a point in life when they can least afford it does the industry a huge disservice.’