The Financial Conduct Authority has said it would like to work with the government and other trade bodies as part of its next step to tackle issues surrounding an ageing population and financial services.

Published today, the regulator’s report Ageing Population and Financial Services identified that there are risks that older consumers’ financial services needs are not being fully met, resulting in exclusion, poor customer outcomes and potential harm.

The regulator has at this stage has not issued rules or guidance but has made some recommendations for financial services firms to consider to help consumers. For example, in terms of product and service design the FCA said firms could “understand and anticipate the current (and future) needs and circumstances of older customers in their target markets”.

It also suggested firms might take older customers’ needs into account when developing distribution channels, and customer support for older consumers, or other vulnerable groups and involve older and vulnerable consumers in testing and product design at proof of concept stages.

With regards to customer support, the FCA asked firms to understand how to help older customers find the most appropriate products and services for their needs. This includes developing new specific products to fill product gaps in the market. It also suggested firms help customers to recognise when they are having difficulties – and encourage them to ask for more help and take steps to mitigate risks and provide appropriate support as consumer needs and circumstances change.

Furthermore, the regulator advocated that firms consider if they need to adapt or retain access channels for groups who depend on them when thinking about strategic evolution. It also advised firms “continuously review strategies, business models, supporting policies, controls and MI”. This is to ensure they remain appropriate in light of demographic change or changing consumer behaviours and needs. This includes being mindful of the risk that business changes can lead to unintended exclusion, or poor customer outcomes.

As part of its next steps, the FCA said it wants to work with government and other bodies to develop inclusion in financial services and set clear expectations for firms. “Many organisations, including the FCA, are at a relatively early stage of addressing this. There is ongoing work required to explore issues and mitigate potential harm. Our Ageing Population work is our first step in this journey.”

Commenting on the report, Hymans Robertson head of products, life and financial services Karen Brolly said: “The financial services industry is only at the very early stages of responding to the needs of an ageing society. Given the oldest old are growing at a faster rate than any other segment of the population, providers are increasingly aware of the fact that they need to take older needs into account when setting up distribution channels and designing new products. But it’s early days.

“One of the biggest financial challenges for the elderly relates to long term care. There’s an urgent need for the government to be clear on what the state will cover in terms of long term care costs. Understandably, insurers are reluctant to develop products in an unstable policy environment. This lack of clarity is stifling innovation.”

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