Later LifeSep 21 2017

Industry unites to back FCA on later life advice

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Industry unites to back FCA on later life advice

Advisers and providers have backed the Financial Conduct Authority’s call on the government today (21 September) to act on the issue of long-term care advice and products.

Martin Bamford, chartered financial planner at Surrey-based Informed Choice, and an accredited later life adviser, said the ageing population and rising care costs are important issue for the FCA and financial services market to tackle.

He added that without the right intervention, there exits a big risk to vulnerable people and their families at a very challenging time in life.

Mr Bamford, who is also part of the Society of Later Life Advisers, a body formed to focus on the issue of later life advice, said: “The FCA could make a huge impact in this market by encouraging greater competition, although the government first needs to legislate and bring in some clarity over a lifetime cap on care fees and higher means test threshold.

“All financial planning firms should be thinking about older consumers, their needs and how to best serve them. Simple steps like getting all members of staff to participate in Dementia Friends awareness training is a must.

"We also need to have more conversations with clients at the later stages of retirement and end of life planning. As we all live longer lives, health challenges like dementia become more prevalent and the financial implications need to be considered.”

Mr Bamford's comments come after the FCA identified a number of issues facing the financial services sector in a paper published today on the ageing population.

Its research found the cost of long-term care in England is “substantial”, averaging around £28,000 a year and reaching £38,700 a year if nursing care is needed.

The FCA has said this cost is likely to increase over time and without adequate financial planning or provision for long-term care, consumers may experience poor outcomes, harm or vulnerability.

But the financial watchdog essentially said it can do nothing without government first acting to lay down the legislative rules around who should pay - and crucially how much they should pay - for long term later life care.

Others who backed the FCA calls for government intervention in the provision of later life, long-term care product provision and financial advice included Jon Bean, chartered financial planner at County Durham-based Eldon Financial Planning.

However, he said that the industry needs better, not just more, government intervention on the issue for providers to create products to service this market.

He said: “Over recent years we have seen governments, of all political colours, kicking this issue around like a football, and this does not help to create an environment where clients can have confidence in long-term planning.

"With an aging population, I feel that it is more important than ever that people are able to plan for their later lives with confidence. Perhaps if we saw some clarity and leadership then providers would be able to create products to fill that gap.

“At present, however, I feel that providers are reluctant to enter a market which may or may not be there in a few years, and that as a result clients are left with the prospect of self-funding – and with little idea of the eventual total cost.”

Jamie Jenkins, head of pensions strategy, at Standard Life, said the FCA’s paper in establishing a market that works well for consumers in later life is to be welcomed, and emphasised the need for later life advice.

"There has been considerable time spent to help close the savings gap for our ageing population and the success of automatic enrolment will make a big difference to future generations, while financial advisers have already adapted well to the changing nature of retirement through the government’s ‘Freedom & Choice’ initiative.

"Many are already very engaged in  providing advice on  the many considerations and needs of people in later life. 

“While the range of products available will always need to be reviewed to ensure they remain fit for purpose, it’s key that people have access to appropriate guidance and, where necessary, regulated advice to help them make the right decisions.

"We do believe it is a challenge, and we are keen to work collaboratively with advisers and the regulator to reach the best outcome possible for customers.”

Steven Cameron, pensions director at Aegon, said the FCA is right to prompt the government to take action on long-term care provision. 

He added: "It’s an issue that successive governments have dodged and we now urgently need a consensus between individuals and the state as to how much people should be expected to pay towards any care needs."