Being able to congratulate the FCA, while not by any means a first, is not something I am able to do regularly.
It is therefore a real pleasure for me to offer my congratulations on its recent paper: “The Ageing Population and Financial Services".
Indeed, I would go as far as to say it is possibly one of the most important pieces of research and comment the regulator has produced, and one which is an invaluable addition to the debate about how modern society will face the many issues that result from the rapid increase in the country’s elderly population.
The Paper’s weakness, however, is that because of the FCA’s particular remit from the government, when it comes to solutions it is forced to focus almost entirely on the part financial services firms have to play in meeting the needs of the nation’s elderly.
Furthermore, it has an emphasis on the avoidance or mitigation of potential harm which, while obviously an important and desirable objective of both the FCA and the financial services sector, will not itself address the fundamental problems at the heart of the growing crisis facing the elderly.
If we, as a society, are to really tackle the challenge of the increasing numbers of the UK population who are elderly, we need joined up thinking across the government.
The first objective must be to encourage and enable far more people to adequately prepare during their productive lifetime for their financial needs in retirement. This will call for a long-term process of consumer education to increase the public’s understanding and awareness of what they will need when they retire.
This will then require a supportive tax and savings regime, which will enable a greater number of people to achieve the savings they will need to maintain their standard of living in later life.
The paper advocates small, but meaningful steps, such as the Pensions Dashboard, the simplification of the rules around later life, mortgages and equity release, all of which will be helpful; however, determined action by the government is essential if the radical solutions needed to make a real difference are to happen.
The bottom line is that, leaving aside the issue of health, there are few problems faced by the elderly that are not much easier to solve if they have adequate income or capital. In reality, as the last 20 years have witnessed the demise of most non-government defined benefit schemes, we are talking about capital accumulated through, in all probability, a lifetime of savings.
The second objective must be to develop a co-ordinated social care policy across the NHS and social services that ensures society as a whole meets its moral obligation to care for those unable to care for themselves.