The Labour peer, and president of the Society of Later Life Advisers, made his comments in a debate in the House of Lords on care funding, in which he said: “Too many advisers sell too much on the basis of too little knowledge.
“There is something about in the industry that I could call the fear of the Financial Ombudsman Service. Many advisers who could play a very useful role for society by getting into this business are frightened that although they may sell the policies reasonably honestly, they will be found to have mis-sold them by Fos and be forced to pay huge amounts in compensation.”
He said while the government was pushing the public to seek advice, it was not signposting this properly, giving adequate information about what the long-term-care funding scheme actually does, or what products would be suitable to help people when planning.
Lord Lipsey also said although there were no discernible moves among the industry to develop specific long-term care products, he said there were two classes of products that are saleable and suitable and would supplement the recommendations of Dilnot as interpreted by the government.
One is point-of-use policies, the second is an enhanced annuity. However, he said: “The government has more work to do before those policies can be safely marketed, sold and developed as they should be to help people as their needs grow.
Kay Ingram, divisional director of national pensions advisory firm LEBC, said: “We understand his concerns about the need for IFAs to be better qualified.
“Planning for care costs is a highly complicated area that requires an understanding of care fees rules and benefits, investment markets and family dynamics.”
Janet Davies, managing director of long-term care advisory trade body Symponia, said: “We agree with both Lord Lipsey and LEBC.
“Care fees planning is a potentially complex area and while we fully applaud the push to financial advice signposts, the advisers referred to must be able to demonstrate that they understand the legislation, family dynamics and how the need for care interacts with the hopes, wishes and dreams of the elderly person facing care.”