The money minefield facing you when you get older

A lot of older people feel let down by financial service firms. They feel misled, unfairly treated and often ripped off by the UK’s banks, insurers and other companies providing essential savings, investments and pension services.

Frankly there has been a deal of evidence of people being let down. But now the Financial Conduct Authority hopes to ensure that in the future older people are given the right financial services or information they need to make the right financial decisions.

That will become crucially important in the next five years as the number of people aged over 65 in the UK is expected to increase by 1.1 million. And it’s why the City Watchdog has started working with the financial industry now to develop new rules that ensure “better outcomes for older consumers”.

Linda Woodall is running a new team at the FCA that’s been charged with examining the issues. “Evidence suggests that as we age we tend to rely less on reasoned, deliberative thinking and more on gut-feel and things learned through experience,” she said.

“Older people also find it more difficult to navigate the proliferation of choice. This emphasises the importance of framing products and services in a way that meets the needs of older people.”

On Monday, the FCA published a discussion paper with contributions from across the industry. It posed many crucial questions. For instance, Nigel Keohane of the Social Market Foundation asked: “How can we stop pensioners from underestimating their longevity and running out of money?”

Meanwhile Sue Lewis of the Financial Services Consumer Panel addressed the issue: “How well do financial products and services meet the needs of older consumers?”

It’s a promising programme which could lead to a potential revolution in the way finance firms deliver their products to people. The clear aim is to ensure that consumers have access to the right financial products at the right time and understand the importance of the decisions they are making.

And that applies to younger people too, as they will become tomorrow’s generation of older people. Equipping them with the knowledge and capability to make reasoned financial choices now could ensure that when they do reach their golden years, they don’t fall prey to the same confusion and mistrust that is a mark of the current generation of older people.

“As an industry we need to be increasingly flexible and accommodative in how we provide access to products and services,” said Tom McPhail of Hargreaves Lansdown. “We need to have vulnerable customer policies in place – for example we offer all clients over the age of 75 the option to have someone else present when meeting with an adviser.”

He warns that the industry needs to consider physical and psychological barriers that older people face while trying to access financial products, such as offering large print, Skype and telephone support, as well as online tools.

Jackie Spencer of Money Advice Service warns that it’s essential for the financial services industry to co-ordinate the message to people about planning financially to live into their 90s and beyond.

“Working together we can start to improve the accessibility of financial products and services and encourage more people to plan ahead and have control over their finances in later life,” she said.

The move is an encouraging one. There are many issues that we will all face when ageing, but having the finance industry on our side rather than just trying to make money out of us will make a huge difference.

The FCA is seeking comment on the issues by 15 April. You can read the discussion paper at bit.ly/1oFfrie and comment at bit.ly/1oztp4h