Otto Thoresen – the new Angela Knight?

Today I’d like to introduce Mr Otto Thoresen to those readers who may not have heard of him. Otto is head of the Association of British Insurers (ABI). So what? You might think. Well, just as the (IMHO) ghastly, self-serving, greedy, bullying creature Angela Knight defended our corrupt, lying, thieving banks, Otto is (IMHO) doing the same for our rip-off insurance companies (click to see more clearly)

Otto is helping insurance companies (IMHO) defraud us in two ways:

Annuities

About 325,000 people buy an annuity each year. Of these 325,000 well over 260,000 are sold the wrong annuity and so will lose thousands, and sometimes tens of thousands of pounds, during their retirement due to the greed and dishonesty of Otto’s members. There are two main areas of mis-selling:

1. OMO (Open Market Option)  Around 85% of annuitants would be better off buying their annuity on the open market and not from the company that holds their pension savings, yet only about 40% do. So 45% of annuitants are being fleeced.

2. Enhanced annuities About 65% of annuitants should qualify for what’s called an ‘enhanced annuity’ – they have a medical condition which means they’ll have a shorter than average lifespan in retirement and so should get more money. Yet only 24% of annuitants actually get enhanced annuities

This mis-selling costs retirees with annuities several billion pounds a year and thus makes several billion in possibly fraudulent profits for Otto’s lucky members. Yet, in spite of these terrible figures, Otto (in true Angela Knight style) claims there is absolutely no evidence of any mis-selling in the annuities market.

Thankfully, Osborne’s recent budget will hopefully decimate the dreadful annuities market and Otto’s members will have to find some new way to screw us to maintain their multi-millionaire lifestyles. As one financial journalist wrote “repeated criticism of industry practices has failed to budge insurers, the ABI prefers to ignore the problem despite evidence of massive financial harm being caused to millions of policyholders“.

Zombie Pensions

At least £150bn of the £850bn we have saved up in our pensions is stuck in what are called ‘zombie funds’. These are pension funds which are closed and so are no longer taking contributions. There are companies which specialise in buying up these closed pension funds and then, because they have no interest in making our savings grow, they just shove our money into dud investments while siphoning off as much as they dare in supposed ‘management fees’.

But if your money is in a zombie pension, it’s often difficult to get it out as many zombie funds charge massive penalties if you try to move your money to a properly managed pension fund. About two years ago, Otto the Insurer promised his organisation “will look into the impact that exit fees are having on old pension plans”. I think we’re still waiting for the results of Otto the Insurer’s great investigation.

A week or so ago there was a huge furore when the Financial Conduct Authority (FCA) announced a review of about 30 million people with poorly-performing or zombie pensions were being treated by Otto’s members. This time Otto the Insurer was pretty quick off the mark making angry phonecalls to the regulator and threatening to write to the Chancellor.

The FCA then seemed to back down. A journalist described the situation “despite the FCA’s attempts to mollify Thoresen and his ABI mates – allowing his members to keep bleeding their policyholders dry by imposing massive charges on older policies – he is still not a happy man” and concluded “meanwhile, for policyholders still facing debilitating pension charges and unable to transfer their funds out because of huge exit penalties, life carries on as before. Truly, the ABI has done itself proud again”

Angela the Banker, Otto the Insurer – are they in any way related? I think we should be told.