The Financial Conduct Authority today called for government action to protect the interests of older consumers who are becoming a bigger group, with an ageing population thanks to extended life expectancy and medical advances.
In a paper published today titled ‘Ageing Population and Financial Services’, the FCA said that it had outlined a number of areas of concern that had implications for the financial services industry.
It pointed to the cost of long-term care for older members of society, with long-term care costs averaging £28,000 a year, though this figure reaches £38,700 if nursing care is needed.
‘Hardship and poor outcomes for the elderly’
It pointed out that these costs are likely to rise, and that many will experience hardship and “poor outcomes” if they have not made financial provision for such costs associated with increased ageing.
The FCA said: “In light of this uncertain landscape, and lack of consumer demand, we recognise that there is limited appetite for the financial markets to intervene to create products and services to support the funding of long term care.
“Given the wide ramifications of policy in this area, we believe these are properly issues for government and parliament to address rather than the FCA.
“What the FCA can do is continue to look at the financial services parts of this market and whether consumer harm is arising.
“Where we see detriment, we will flag this to government and parliament where appropriate.”
The “limited appetite” to serve this market was, it said, partly due to a feeling among financial services providers that policy in this area is likely to change, creating uncertain market conditions in which to trade.
‘Additional problems with mortgages for older borrowers’
There were additional problems with mortgages for older borrowers, said the FCA, with lending criteria being “opaque” and a lack of consistency as to upper-age limits for borrowers.
“Firms may be unnecessarily limiting themselves, and older borrowers, by having rigid policies or systems and controls that are unable to consider individual circumstances, potentially resulting in unintended exclusion of credit-worthy consumers in the target market,” the report said.
The 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.