How Are Annuities Regulated and How Am I Protected?

If you’re thinking about buying a pension annuity, it’s completely natural to want reassurance that your money is safe—and that the people selling you a product are acting in your best interests.

The good news? In the UK, annuities are tightly regulated, and several organisations are in place to protect you every step of the way—from your first conversation with an adviser, right through to receiving your retirement income.

Here’s a clear and simple guide to who regulates annuities and how you’re protected.

1. The Financial Conduct Authority (FCA): Setting the Standards

First off, anyone selling or arranging annuities must be authorised by the Financial Conduct Authority (FCA). That includes financial advisers, brokers, and the companies providing the annuity itself.

The FCA is the UK’s financial regulator. Their job is to make sure firms treat customers fairly, offer products that are appropriate, and provide clear information you can understand.

When it comes to annuities, the FCA sets strict rules covering things like:

• How much income your annuity will pay
• The fees and charges involved
• Whether your income will rise over time
• What happens to the income when you pass away

Firms must explain all this clearly—no jargon, no surprises. The goal is to help you make an informed decision that suits your needs.

2. The Financial Services Compensation Scheme (FSCS): Back-Up If Things Go Wrong

What if your annuity provider were to go out of business?

That’s where the Financial Services Compensation Scheme (FSCS) steps in. It protects people who’ve bought annuities from UK-regulated insurers. If your provider goes bust, the FSCS can cover 100% of your pension—with no upper limit.

You’re also covered if a regulated adviser gave you bad advice that led to financial loss. In that case, the FSCS could compensate you for up to £85,000, provided the adviser is no longer trading.

As Lila Pleban from FSCS said in 2023:

“It’s clear that people aged 50 and over need access to reliable guidance when choosing the right retirement product. That’s why we focus on empowering consumers with the knowledge they need to feel confident about their money.”

🔍 Tip: You’ll only be protected if your provider or adviser is FCA-authorised. Always double-check this before committing.

3. The Financial Ombudsman Service: What If You Have a Complaint?

Sometimes, things don’t go to plan. If you’re not happy with how a company has treated you, you have the right to make a complaint—and there’s a formal process for that.

Start by contacting the firm directly. They must:

• Acknowledge your complaint promptly
• Respond in full within eight weeks

If you’re not satisfied with their answer, you can then take your case to the Financial Ombudsman Service. This is a free, independent body set up by Parliament to resolve disputes between consumers and financial companies.

You don’t need a lawyer or any special knowledge to use the service. They’ll look at both sides of the story and decide what’s fair. If they agree with your complaint, they may:

• Award compensation
• Ask the firm to put things right
• Make a payment for the trouble and upset caused

You can start the process online by visiting their website and filling in a simple complaint form.

4. Need to Complain? Here’s What to Do

If you’re unhappy with the service you’ve received from an annuity provider, adviser, or broker, here’s a quick checklist:

Step 1: Raise your concerns with the company directly. Be clear about what’s gone wrong and what you’d like them to do.

Step 2: Wait for their response (they must reply within eight weeks).

Step 3: If you’re not satisfied, escalate your complaint to the Financial Ombudsman Service.

You can find helpful “how to complain” guidance on both the FCA’s and the Financial Ombudsman’s websites.

Final Thoughts: You’re Not Alone

Choosing a pension annuity is a big step—but you’re not going into it without support. UK regulation offers solid protection for consumers, and if anything does go wrong, there are safety nets in place to help you.

Whether it’s ensuring you’re treated fairly, protecting your money, or helping resolve complaints, these organisations exist to make sure your retirement income is handled properly.

Always deal with FCA-authorised firms, ask plenty of questions, and don’t be afraid to speak up if something doesn’t feel right. Help is always available if you need it.