Wise up to older clients

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.

I have a lot of sympathy with Ms Lewis’s comment that older people are likely to find themselves victims of age discrimination, from which, while illegal for most goods and service providers, financial services are exempt. Travel and car insurance and mortgages are good examples, with each having an arbitrary age irrespective of applicant health or fitness. Her solution is to amend the Financial Services and Markets Act to place a duty of care on firms to ensure they take into account the complexity and risk of the product they are offering. That may well be a good solution, but I do not want to see anything that places unnecessary burdens on firms, the cost of which will be borne by the consumer, making the products even less accessible.

In terms of the wider role of firms, later in the paper António Simões, from the FCA Practitioner Panel, looked at adapting to the changing needs of our customers and Dr Yvonne Braun, from the ABI, considered how the industry could make its products and services meet the needs of an ageing population. I like Mr Simões’s point that living for longer will, in itself, not be the only driver for change. Individuals are expected increasingly to make provision for their own later life alongside, or in place of, collective savings vehicles. Meanwhile, decumulation is likely to involve increasingly a period of semi-retirement, as people move to part-time working while continuing to draw an income.

If individuals are to take more responsibility for their own later life provision then they must have easy access to up-to date financial information, which will require the state and private sectors to work together much more closely than they do at present and the FCA could play a huge facilitatory role in bringing this about. Mr Simões goes on to make an important point about the fact that although people may be living longer, a substantial period of this may be in poor health, requiring the funding of long-term care.

Ms Braun reminds us of the Association of British Insurers (ABI) and British Insurance Brokers’ Association’s new ‘Vulnerable Customers Code’, around home and motor policy renewals, and also that the Government’s ‘freedom and choice’ pensions reforms have given unprecedented flexibility at the point of retirement. I endorse the ABI’s view that the recently published Financial Advice Market Review (FAMR) provides a golden opportunity to rethink how to enable providers to give policyholders more support. The recommendations within the report contain some decent foundations which, if built upon, could increase the accessibility of ‘pre-retirement’ advice. Quite how they define this will be interesting, as it could cover debt, mortgages, savings and investments.

I applaud the FCA as it seeks to ensure that it continues to play a vital role in making sure that older people get the best financial advice possible, and it is therefore doubly important that we all continue to make our best efforts to support them. However, it is important that we remember that in any consideration of the sale and supply of financial products to older people, the FCA will only ever be part of the landscape – an important element for sure – but not the whole picture. There are other organisations out there that also have a key role to play.

First StopAdvice, provided by the Elderly Accommodation Counsel (EAC) in partnership with a number of other national and local organisations, is a good example. They offer independent, impartial and free advice and information to older people, their families and carers about housing and care options for later life. The Society of Later Life Advisers (Solla) is another consumer body geared towards introducing older consumers to fully accredited later-life advisers. Following the successful launch of its Retirement Advice Standard, in context with Mr Simões’s remarks above, Solla has introduced a Care Standard to the care sector, providing it with an independent standard that quality assures their provision of non-regulated information and advice on choosing and paying for adult care and housing. The standard is for those unregulated advisers actively involved in the provision of information and advice for adult care and housing.

In terms of support in the critical area of paying for care, I would like to encourage Local Authorities to consider a ‘Care Navigator’ service approach. A journey that starts with free quality assured information provided by ‘Care Navigators’ trained to the Solla Care Advice Standard leading to appropriate community-based resources and a chargeable ‘Care Planner’ service where appropriate.

In other parts of the financial landscape, we could build on the public institutions already in existence and further improve what is already working well. The Pensions Advisory Service (TPAS) is very competent and wants more customers through its doors, as it is only reaching a fraction of the overall population who could do with their advice. We should be ensuring that more people use it, perhaps by funding some sort of publicity campaign allied with a supportive regulatory requirement that people speak to TPAS before they make important financial decisions. What about a Pensions Dashboard that could help simplify and clarify people’s overall savings position in advance of big decisions?

There is also the potential to build something powerful to replace the Money Advice Service (Mas), which is set to be replaced by a much smaller body with a focus on providing ‘frontline’ services to those in financial difficulty. A good start would be to align its guides, tools and calculators with improved individual support in person, over the phone and online. Citizens Advice may also have a role to play in improving older people’s financial capability. Although, in the long run, only improved financial education at a younger age would mean that most people, whose only current experience of financial products are bank accounts and credit cards, would be better placed in older age to manage their more complex financial affairs more effectively.

So, all in all, this Paper is a significant contribution by the FCA to improving older people’s access to good financial advice and products. However, we all have a part to play, and so I would encourage everyone with an interest to participate in the associated consultation which closes on 15 April.

Baroness Sally Greengross is chief executive of the International Longevity Centre

Key points

FCA Discussion Paper DP16/1 suggests that older people want what everyone else does: to get the financial products and services they need at a fair price.

Paul Broadhead says that we must make sure that older customers are empowered with the information they need to make decisions about their finances.

FCA seeks to ensure that it continues to play a vital role in making sure that older people get the best financial advice possible.