The UK Financial Conduct Authority (FCA) commissioned Oxera and the Nuffield Centre for Experimental Social Sciences (CESS) to conduct an experiment to test the impact of prompts on consumers’ propensity to shop around for pensions annuities. The findings of the experiment will be used by the FCA in its proposed remedies for the annuities market.
The results of the experiment highlighted that personalised messages are the most effective form of prompt. Participants were significantly more likely to shop around for an annuity when they were shown precisely how much they would lose out on by not doing so. Social norms were also found to have a large impact on shopping around. Participants who were told that ‘eight out of ten’ people who buy an annuity from their existing provider miss out on increased income also experienced significantly larger shopping around rates.