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Key Retirement's Mirfin explains lack of care products

Key Retirement's Mirfin explains lack of care products

The financial services sector is unlikely to provide products to help people pay for social care until there is a cap on cost in place, Dean Mirfin has said.

The chief product officer at Key Retirement said that at the moment the cost of care is theoretically unlimited, meaning it is impossible for any company to put together a product which covers the price of help in later life.

In the Financial Conduct Authority’s paper on the ageing population, published last month, the regulator called on the government to act on the issue of long-term care advice and products to avoid people sleepwalking into a harmful or vulnerable old age.

The regulator stated providers may be put off from entering this market because of uncertainty around government policy and a lack of interest from consumers who have many misconceptions about long-term care.

Mr Mirfin said: “The biggest barrier is the lack of a cap. If you know what something costs you can do something about it.

“Having been around for 20 years and seen care products disappear from the market, the major thing a government can do to encourage positive behaviour and people to plan for their care costs is to put a ceiling on them so I know what my liability is.

“How do you advise on meeting a completely open-ended liability? How do customers plan for that?”

The Dilnot report, published in 2011, originally recommended a cap of £35,000 but this was increased to £72,000 by the coalition government and was supposed to be introduced by April 2016.

But in 2015 the previous government pushed this back to 2020 because it would add £6bn to public sector spending at a “time of consolidation”.

In its manifesto for June’s general election, the Conservative Party promised that people needing social care would have to pay for it until the value of their assets – including their home – reaching a floor of £100,000.

After being faced with heavy criticism for this so-called “dementia tax” prime minister Theresa May promised to set an “absolute limit” on the amount people would have to pay for their care but did not say what this limit would be.

The Department of Health did not respond to questions about what its policy on the social care cap currently is.

The FCA’s report on the ageing population 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.

On average, across the UK, 41 per cent of care home residents are entirely self-funded, 37 per cent are funded by the public purse, and others self-fund part of their care or receive other funding.

It is estimated where self-funders run out of money, this costs the state around £425m.

But the FCA said there is a common misconception that care is government-funded as part of the NHS and there is evidence of a perception among older consumers that their families and homes will provide financial support for care they may need.