Products and services in the financial services industry are too often designed for “average” consumers which may not actually exist, a figure at the Financial Conduct Authority has said.
Linda Woodall, director of life insurance and financial advice at the FCA, said the regulator also found instances where a firm’s policies and processes were designed around its needs rather than those of its customers.
She was speaking at the launch event of the FCA’s occasional paper on the ageing population.
Mr Woodall said: “All too often, products and services appear designed for an ‘average’ consumer - who may not actually exist.
“A number of our other pieces of work indicate that products and services are not always designed in a way that best meets the needs of the wide range of consumers that make up firms’ wider target markets – and this includes older customers.
“So firms could think about how they can take older customers’ needs into account when developing products, services and distribution channels, and involve older consumers in testing and product design.”
She said firms also need to think about what they can do to support their customers, since they might be a first port of call when someone is thinking about retiring, suffering a bereavement or trying to fund residential care.
Ms Woodall added: “We recognise the landscape is ever shifting. This cannot be regarded as a point in time challenge and solutions will need to be reviewed and adapted.
“It requires continual, not one-off, short-term solutions, or ‘box-ticking’ approaches which do not move with the times. This is true both for firms and for us as the regulator.”
The FCA published its paper on the ageing population last month, addressing a number of issues such as social care and lending into retirement.
It carried out this work because the UK population is getting older and living longer, with one in three babies born today expected to live to 100 and one in four people aged over 65 by 2050.
Among the issues the FCA found was a lack of products for those looking to cover the cost of long-term care and a lack of understanding of its costs among consumers.
The FCA also found the mortgage sector was plagued by opaque and complex lending criteria which may prevent the elderly from accessing a mortgage product, as well as a lack of innovation.
Ms Woodall said: “We found that there’s a risk that older consumers’ needs aren’t being fully met – which could mean exclusion, poor customer outcomes, and potential harm.
“We found that there’s scope for firms to do more to support older consumers – from how products are designed, to the way consumers engage with their financial products and services and how they are supported when they do so.
“For firms in particular, there is an opportunity to think about how they can apply these findings as part of their own business strategies and models going forward.”
She said the FCA would review this issue in “three to five years” to find out how the industry had adapted.
damian.fantato@ft.com
