According to our autumn LiveMore homeowner survey of 500 people, key factors behind this were because they had little or no savings (47 per cent), while 35 per cent said it was due to the burden of bills and credit commitments. At the same time, 37 per cent indicated poor health, 32 per cent mental health issues, while 23 per cent had a physical disability.
One interviewee said, “Last year, I had my shopping delivered by Tesco. I’m in my 90s and not as strong as I used to be, so I’d rather stay home and have my groceries delivered, especially in the winter, but now I don’t have a choice. Now my daughter takes me to Aldi.”
This is one of many unfortunate examples that we heard of how the high price of living is increasing vulnerability in our ageing populace.
The Financial Conduct Authority (FCA) considers a vulnerable customer as “someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care”.
The FCA’s Consumer Duty principles take a clear and strong stance on vulnerability in an effort to ensure that financial services firms take it seriously. They mandate that financial advisers have a greater awareness of customer vulnerability so they can provide “good outcomes” to borrowers.
The Consumer Duty mandate to avoid foreseeable harm, aims to protect people affected by any of these four key areas:
- Low resilience to financial or emotional shocks – they may be in debt and have limited or no savings
- Poor health, including mental health, illness and disabilities
- Recent life events, such as divorce, new caring responsibilities or bereavement
- Limited capability with number or literacy, or poor digital skills
How to help older, vulnerable customers
According to Consumer Duty, when dealing with a vulnerable client, brokers should not only offer them a product that is right for their specific requirements, but they must also ensure that the client understands it.
With older borrowers, intermediaries should always start with a thorough affordability assessment of all income and expenditure, before even considering the potential options available. These should then be communicated in an understandable format.
The FCA has made it clear that intermediaries should not assume that lifetime mortgages – or equity release – are the immediately appropriate solutions for homeowners, just because they are in their 60s, 70s, 80s or even 90s. Other types of mortgages are often more suitable and cheaper in the long run.
These can include mortgages not traditionally offered to older age groups, including repayment, interest-only and retirement interest-only.
While circumstances can change quickly for any of us, this can be more likely as we age.