The Financial Conduct Authority (FCA) has published an Occasional Paper outlining the findings from a project that explored how the ageing population would impact the financial services industry.
The regulator launched the Ageing Population Project in February 2016 to explore how older people use financial services and products. The paper reviews the public policy implications of having a population which is getting older and the resulting impact on financial services. The document also includes actions which the FCA and industry could take to better support older people.
This publication is the first of a series of documents which the FCA will publish as part of our focus on consumers including an overarching strategy ‘Approach to Consumers’ which will be published later this autumn.
When reviewing the treatment of older people, the FCA found that there are risks that their financial services needs are not being fully met, which can result in exclusion, poor customer outcomes and potential harm. The issues appear to be driven by a range of interrelated causes. These include policies and controls that are not designed around consumer needs and unintended consequences of product and service design.
The FCA said that while older consumers are not necessarily vulnerable, they are more likely than other groups to experience vulnerability at some point (whether temporarily or permanently). This is particularly the case for those aged over 75. In line with the aims of the FCA’s Mission, this paper has focused on the issues where regulation and financial services firms can play a role and make a difference.
The regulator said there is scope for financial services firms to do more. The FCA has set out some ideas for firms to consider in ways that fit their business models, such as looking at product and service design, customer support, and reviewing and adapting strategies.
The paper also explores a range of issues including older consumers’ engagement with retail banking, third party access and planning ahead, later life lending, and long term care.
These issues will require action from multiple parties to address over time. In many cases, solutions do not lie within the remit of any one party – including the FCA, or the regulated firms that it supervises.
The FCA has considered who might be best placed to address the gaps to improve financial markets for older people including other bodies who might be better placed to take forward topics outside the FCA’s remit. The FCA anticipates a further review in three to five years of how the financial services industry is adapting to meet the needs of older consumers.
Linda Woodall, director of life insurance and financial advice at the FCA, said: “We hope that today’s paper will help drive further positive innovation in the interests of older consumers. Our findings highlight the extensive public policy challenge requiring action from firms, government, regulators and other parties to bring about improvements for older consumers who use financial services.”
Stuart Wilson, channel marketing director at More 2 Life, added: “The paper released by the FCA, highlighting the advice and product gap in the market for older customers is a wake-up call for all lenders and advisers who work within the retirement lending market. Equity release has seen record levels of growth recently, however, as these findings show there is still more to be done to ensure older homeowners are receiving the right advice and are gaining access to the products they need to fulfill their borrowing needs.
“At More 2 Life we fully support the sentiments of the FCA and we are committed to working with advisers to ensure they provide the best possible advice for their clients. As such, we will be launching a new campaign for equity release advisers, which will aim to put specialist independent advice at the heart of getting better outcomes for consumers.”