FCA calls for government action on long-term care advice
Reported by FT Adviser (21 September): The Financial Conduct Authority has 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. In a paper on the ageing population, the FCA identified a number of issues facing the financial services sector. 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 some in the industry also warned the regulator about a limited availability for insurance products and savings vehicles for long-term care. The regulator said 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.
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. The FCA’s paper also found issues in the mortgage sector, particularly in relation to lending into old age. These included opaque and complex lending criteria, which may prevent older consumers from accessing a mortgage product, the limited appetite among some lenders for later life lending, and the lack of innovation.