skip tocontent

ombudsman news

issue 111

August/September 2013

ageing - alternative perspectives

The case studies we have included illustrate the wide range of issues that older people bring to us - and our perspective can only ever be informed by the cases we have seen. So we asked Age UK and Which? to tell us about things from their perspective.

here's what Age UK said ...

Older people are significant consumers of financial services - and of the Financial Ombudsman Service. This is no surprise, as they constitute a rapidly increasing proportion of the population. Today over 10 million people in the UK are aged 65 or over, but this number is expected to pass the 16 million mark in the next 20 years.

Age UK represents the interests of the 14 million people in the UK who have now reached later life. We provide information and advice to some 6 million older people each year. Many of the enquiries we receive relate to challenges they face in accessing quality financial services that reflect their needs.

Below are the five most common themes that we see here at Age UK.

1. older people are often excluded from financial services - or disadvantaged - purely on the grounds of age

AgeUK receives numerous age-related complaints involving the poor treatment of older people seeking financial services. Being denied certain products - or products being priced punitively - based on age alone (rather than the risk the customer presents or their ability to repay) is the source of real problems for many older people. For example, difficulties getting insurance may force some to give up driving or travelling.

As people live longer and in many cases healthier lives, chronological age is becoming an increasingly crude tool for limiting access to financial products. Rules that discriminate on grounds of age are not always unfair, but they should be justifiable and we hope that firms will review their policies and procedures to ensure they are as age-friendly as possible.

2. older people find that financial services providers don't always respond well to the debt problems that they have

Older borrowers are more likely to have an interest-only mortgage because many of these loans were sold in the 1980s and early 1990s and are now approaching maturity. A recent review by the Financial Conduct Authority estimated that every year between 2017 and 2032, 40,000 households aged 65 and over will see their interest-only mortgage mature.

In addition, 25,000 households aged between 50 and 64 will see their interest-only mortgages mature, rising to 130,000 households in 2032. FCA modelling suggests that nearly half of all interest-only loans are unlikely to be paid back in full. Of those, half will still owe £50,000 - a significant amount of money for many people to find from existing savings which might have been earmarked for retirement.

Age UK urges financial services providers to work proactively with older borrowers to find affordable and realistic solutions to the problems they face, including extending mortgages where someone can afford to do so. We also strongly advocate the importance of access to targeted, independent advice for those older people who are experiencing difficulties.

3. older people find that financial services providers don't always deal well with the life events that happen to them

Whilst we are generally living longer, healthier lives, later life may also include bereavement, the illness of a partner, acquiring a health condition and the need to move into a care home.

Age UK receives a large number of complaints from older people who report that firms don't understand the impact of these life events. With the rapidly changing demographics - the number of people over 85 in the UK is predicted to double in the next 20 years and nearly treble in the next 30 - it is vital that financial services providers equip their staff and systems to respond effectively, considerately and flexibly to the needs of older people facing what are already very trying circumstances.

Although many providers already have special services for people in such circumstances, too often frontline staff are not aware of them. Through its Engage business network, Age UK has a number of services designed to help businesses provide for the growing older marketplace.

4. older people's independence may be threatened by lack of access to banking services that meet their needs

Many people living with long-term conditions struggle to access banking services independently, including some of the most basic ones such as withdrawing cash or making payments, because of systemic barriers and inflexible policies.

Staff are not always aware of alternatives to mainstream access, such as chip and signature cards instead of chip and PIN, and whilst online banking can be a useful option there are issues of trust and many older people simply do not have access to the internet or cannot navigate through complex security.

Given the delivery of state benefits through banking it is vital to ensure bank accounts are fully functional for older people. And while there are clearly advantages in technological innovations, it is vital that these are not at the expense of leaving older people behind. If providers wish older people to take up new technology, they must also ensure that it meets their needs.

5. financial services providers often fail to treat older people with dignity

Too often we hear stories at Age UK about providers assuming that someone is mentally incapable, simply because they have a hearing difficulty, or - in one case - refusing to believe an older customer who complained about an unauthorised withdrawal, simply because of her age.

While dementia is certainly an increasing problem, incapacity is not an inevitable consequence of age, and no matter what their age people should not be talked down to or - if they are with a friend or relative - cut out of the decision making. This brings challenges for all service providers, but there is useful guidance in relation to the Mental Capacity Act and good practice to learn from.

In particular, Age UK has recently worked with the British Bankers Association, the Office of the Public Guardian and the Building Societies Association to develop guidance for a consistent approach by financial services providers to policy and process in support of third party mandate holders.

Many of the problems that older people face when using financial services could be mitigated by some simple inexpensive measures - for example, better training, alternative ways for customers to access their money and banking services that are designed with older people in mind.

older people and the ombudsman ...

  • 24% of all complaints brought to us last year were from people aged 65 or over
  • over the last three years we've seen a 249% increase in the number of complaints from over 65s
  • this may reflect our outreach work with older and retired people over the last few years - with more consumers in the older age groups showing increased confidence in complaining

what do older consumers complain to the ombudsman about?

  • 22% PPI
  • 16% investments and pensions
  • 15% current and savings accounts
  • 13% credit cards and credit related products
  • 7% mortgages
  • 6% building and contents insurance
  • 4% motor insurance
  • 4% travel insurance
  • 13% other products

image: ombudsman news issue 111

image: ombudsman news

Age UK key facts ...

  • Age UK provides a wide range of information and advice to older people including on managing money.

    Businesses can refer customers to the Age UK website or free national advice line (0800 169 6565) to find out more about how Age UK can help.

logo: Which?

Which? says ...

  • "People over 65 are generally more confident than the overall population when it comes to complaining - with the exception of writing online reviews."

    "According to our April 2013 survey, people over 65 who are living on their pension are, like everyone else, worried about the cost of energy, fuel and food. The only area they are significantly more worried than the overall population is the interest rates on savings."

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.