I have been asked to look at how the FCA Discussion Paper DP16/1 Ageing Population and Financial Services treats financial products, their advice envelope and the role of firms.
In their contributions to the paper, Sue Lewis from the Financial Services Consumer Panel, looked at how well financial products and services meet the needs of older consumers, Eric Leenders from the British Bankers’ Association, looked at communication, and Paul Broadhead from the Building Societies Association, reviewed how firms can adapt to meet the needs of an ageing population.
I heartily endorse Ms Lewis’s comment that older people want what everyone else does – to get the financial products and services they need at a fair price and to have open and transparent dealings with providers. Yet their needs and aspirations can often run counter to the way products are accessed and purchased in our modern technological marketplace. Older people are less likely to be digitally included, so they can struggle in a world where online services are becoming the norm, and face-to-face contact is whittled away as banks withdraw their high street presence.
I agree with Mr Leenders that with the spread of smart devices and the rise of mobile and digital banking services, it is necessary to adapt communications to respond to changing consumer behaviour and the needs of older people, by striking the right balance between providing the right needs-based support and avoiding making stereotypical assumptions about capability based on people’s age.
As he says, not everyone will want to harness new services, but it is vital that no one feels excluded from easy-to-use technology. For sure, communicating with vulnerable customers is not without its challenges; consumers are often reluctant to disclose vulnerabilities, such as failing eyesight or hearing, and this can make it difficult to communicate with them in a manner which is both empathetic and effective. My own view is that, despite evidence that customer retention is both cheaper than customer acquisition and can deliver a higher return on investment, most firms still undervalue existing customers and penalise them by leaving them on poor tariffs or terms, while offering the best rates online. By definition, this churning will affect older customers the most, yet not only does it persist, but it also seems to be increasing.
I fully support Mr Broadhead in his assertion that we must make sure that older customers are empowered with the information they need to make decisions about their finances. Financial services is not just about first-time buyers, life does not become less complicated as you get older – in fact, retirement is a process rather than an event and it can become increasingly complex. I fully endorse his proposition that firms should consider having someone at a senior management level who is a strong advocate for the needs of older customers. This ‘Older Persons’ Champion’ should think about whether every part of the business is geared to serve older customers.