Pension providers will have to show how their products compare with those of rivals after the City watchdog launched a crackdown on poor value annuities.
The Financial Conduct Authority (FCA) is concerned that pensioners are missing out on a better retirement income because they are not being encouraged to shop around when they buy an annuity.
The watchdog is recommending a package of measures to improve competition, including a requirement for insurers to show how their annuity products compare with those of rivals.
The FCA’s review found evidence that sales practices are contributing to consumers not shopping around and switching.
It identified particular areas of concern in relation to enhanced annuities, where some firms are failing to tell customers that other providers may offer annuities for medical conditions that they do not underwrite.
The organisation, which launched its study into the market in February, said that the Budget reforms which offer more flexibility over what people can do with their savings made it vital that consumers are properly supported in reaching their decisions.
Christopher Woolard, director of policy, risk and research at the FCA, said: “The Budget reforms are a game changer for the retirement income market.
“People will be given more choice and many will want some support to ensure they make the right decisions for them.
“We want to see firms improving the way they communicate with their customers. In order for the pension reforms to work and for people to have trust and confidence in the products they are buying, firms need to act now.”