The Financial Conduct Authority plans to produce a strategy on what the financial services industry must do to help the ageing population next year.
The ageing population review kicked off with a discussion paper, published today (22 February).
The paper included comments by Eric Leenders, managing director for retail and commercial banking at the British Bankers’ Association, who said a fresh look at the ‘gap’ in retail investment advice with a view to enabling banks to re-enter the advice space was important.
He said: “The pensions reforms not only increase consumer need for investment advice but present a clear opportunity for greater consumer engagement by the industry.
“Therefore the BBA has encouraged both the Financial Advice Market Review (FAMR) and Public Financial Guidance reviews to prioritise work on affordable regulated advice for investment and protection, saving into a pension and taking income in retirement for mass market customers.”
The Financial Advice Market Review is looking at ways to bring advice back to the mass market.
Mr Leenders comments came after FTAdviser revealed last month that HSBC is testing standalone investment advice, where the bank will give advice on investments only without considering the customers’ wider financial situation.
The regulator will use the information gathered through the discussion paper to help it prioritise a programme of work that looks specifically at the ageing population.
This will be supplemented by more research, which will be scoped in the second quarter of 2016, and will take account of existing research and recommendations.
This will be used to develop an FCA strategy on the ageing population which it will launch in 2017.
The FCA is seeking comments on the issue of the ageing population and the scope of its project by 15 April 2016.
According to the regulator firms must work with it to future proof the financial services industry to meet the challenges presented by Britain’s ageing population.
Tracey McDermott, acting chief executive of the FCA, said: “The number of people aged over 65 in the UK is expected to increase by 1.1m in the next five years.
“There is a real and urgent challenge for the financial services sector to develop new and innovative products to meet the needs of our changing population.
“The publication of this discussion paper is intended to stimulate debate and discussion about these needs and how to meet them.
“Ultimately, the industry must take the lead but we recognise that the FCA has a key part to play in ensuring we encourage appropriate innovation that also provides proper levels of protection for consumers.”
Linda Woodall, the FCA’s director of life insurance and financial advice, is leading a new team that is looking specifically at the challenges facing the ageing population and financial services.
Keith Richards, chief executive of the Personal Financial Society, said: “With the introduction of pension freedoms offering even greater control and choice over our pension funds, the need for professional advice to deliver the benefit of effective financial planning has become even more evident and valuable.
“An ageing population in the UK presents substantial, complex and increasing challenges not only for government and regulators, but also the financial services industry too.
“Retirees increasingly need help with striking the right balance between flexibility and security of income; taxation and greater understanding in respect of the provision and funding of health and social care.”
Mr Richards said there is a “critical and growing need” for information and guidance on how the care market works and added guidance service Pension Wise could fill this need.
Jackie Spencer, pensions and retirement strategy manager at the Money Advice Service, said: “Working together we can start to improve the accessibility of financial products and services and encourage more people to plan ahead and have control over their finances in later life.”
