Old Mutual has come out in support of the call by the Financial Conduct Authority (FCA) for the government to take action on financial services provision for the older section of the population, its chief tax and planning adviser said today.
Rachael Griffin (pictured left) at Old Mutual Wealth was speaking after the FCA called for government action to protect the interests of older consumers who, it said, are becoming a bigger group, with an ageing population thanks to extended life expectancy and medical advances, as reported.
The FCA has today published a paper titled ‘Ageing Population and Financial Services’, in which it said that it had outlined a number of areas of concern that had implications for the financial services industry.
Griffin outlined the reasons underpinning her view that it is incumbent on the government to develop a clear policy on social care for the elderly.
There needed to be a campaign, she argues, to educate people so they will better prepare their financial affairs to deal with problems relating to physical or mental health issues in later life.
Griffin also argued that making things easier for this potentially vulnerable group may not always make things better.
‘Large numbers with longstanding illness’
She pointed out that, among the over-65 age group, 40% have some form of limiting longstanding illness, describing the FCA paper as “an important step on a long journey” towards full and proper recognition of the needs of this growing part of the population.
One of the biggest challenges facing the ageing population, Griffin said, was the burden of the escalating cost of care, noting the FCA was right to draw attention to this.
“The government needs to lead the charge on coming up with a long-term solution to the social care crisis and provide certainty about how care costs are funded,” she said.
“Social care policy came to the forefront in the snap election, but has since fallen by the wayside as politicians focus on how to deal with the implications of Brexit,” argued Griffin.
Social care policy must be clearly defined
A social care green paper is expected “in the near future”, she said, and added her hope that it will propose solutions that are “simple, sustainable and communicated in consumer-friendly language – anything else will leave the public back at square one.”
The escalating cost of long-term care was, she said, a major factor that consumers should be planning for, though she saw some signs of improvement in the situation with regard to the elderly granting power-of attorney rights to their children or other parties.
“It is encouraging that there are now over 2.6m lasting power of attorneys [LPAs] in place,” she said, “but dangerous misconceptions still exist and any campaign that looks to raise awareness about LPAs also needs to ensure it has an education element about how they work.”
Greater likelihood of scams
And as well as being prepared for the substantial costs of later-life care, said Griffin, society needs to be more mindful of the increased risk of fraud being perpetrated upon older, more vulnerable customers.
“It’s also crucial to remember that older customers are often the main targets for scams and so we would caution that any other third party work-around should be used sparingly and have a robust framework,” she said.
“Otherwise, firms risk creating a hotbed for scam artists looking to take advantage of older customers.”
In a statement released today, the Association of British Insurers (ABI) also threw its weight behind the FCA’s position, saying that it welcomed the FCA’s findings.
Ensuring a market and policy environment that delivers good outcomes for older customers requires the “combined efforts of firms, regulators and policymakers”, it added.
It also pointed to the fact that it has a forthcoming vulnerability guide that aims to better equip firms in their “understanding, identification and support of vulnerable customers, including the challenges they face as they age”.
The FCA report follows yesterday’s announcement, as reported, by the Work and Pensions Committee that it is to carry out a far-reaching examination of the pensions industry amid fears that the public is receiving poor financial advice or even falling prey to ‘scams’ and fraudsters when it comes to their savings and retirement incomes.