The launch of the secondary annuity market should be delayed due to post-Brexit market uncertainty and lack of interest from advisers, according to the Association of Professional Financial Advisers (APFA).
The secondary annuity market, due to launch in April next year, gives retirees who have already bought an income for life the chance to sell it for a cash lump sum.
It is an extension of pension freedom which effectively removed the obligation for retirees to buy an annuity with their retirement pot.
The Financial Conduct Authority’s consultation on the secondary annuity market closed on 21 June. APFA’s response urged the watchdog and HM Treasury to push pause on the project.
It said post-Brexit market uncertainty and lack of adviser interest were key factors. The government has previously stated financial advice will be mandatory on annuity resales.
Director general Chris Hannant said: “Now that the UK public has voted to leave the EU, the financial markets are facing considerable uncertainty and upheaval. Financial advisers, their clients and the public have a lot on their plate to contend with over the next few years.
“I have concerns about the workability of the proposals as the vast majority of financial advisers I have spoken have said they just aren’t interested. There is, therefore, the risk of a mismatch of supply and demand, particularly given the creation of a mandatory advice requirement for those whose annuities are valued above a certain threshold.”
Hannant added: “HM Treasury and the FCA need to recognise that the time is not right to push ahead with their plans for creating a new secondary annuities market.
“I believe the correct course of action is to shelve these plans until advisers and their clients have had the time to digest and work through the current market uncertainty.”
The FCA has previously said the market poses a significant “risk to consumers” unless they are properly protected. The government previously predicted about 300,000 people will sell their regular retirement incomes.
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