The cost of living crisis in the UK is taking a heavy toll, particularly on those aged 50 to 79. Recent findings have revealed that nearly one in three people within this age group consider themselves vulnerable. This vulnerability stems not only from financial struggles but also from health-related issues, according to Leon Diamond, CEO of LiveMore.
Financial Struggles and Health Concerns
A detailed homeowner survey conducted this autumn, involving 500 individuals, sheds light on the challenges faced by the over-50s. A significant 47 percent of respondents are grappling with inadequate savings, while 35 percent are burdened by escalating bills and credit commitments. Health concerns are also alarming, with 37 percent suffering from poor health, 32 percent facing mental health issues, and 23 percent dealing with physical disabilities.
An interview with a nonagenarian highlights the stark reality of these challenges. She recounts her shift from home delivery services to accompanying her daughter for more affordable shopping options, a change forced by the rising cost of living.
FCA’s Definition of Vulnerability
The Financial Conduct Authority (FCA), a regulatory body, defines a vulnerable customer as someone whose personal circumstances make them particularly susceptible to harm, especially when firms fail to act with adequate care. The FCA’s Consumer Duty principles emphasize the importance of recognizing and addressing customer vulnerability.
Consumer Duty’s Four Key Areas of Protection
Consumer Duty focuses on protecting people in four critical areas:
- Low resilience to financial or emotional shocks, including debt and limited savings.
- Health challenges, encompassing mental health, illness, and disabilities.
- Life-changing events like divorce, new caregiving responsibilities, or bereavement.
- Limited skills in numeracy, literacy, or digital proficiency.
Guidelines for Assisting Older, Vulnerable Customers
Consumer Duty mandates brokers to not only offer appropriate products to vulnerable clients but also ensure their understanding of these products. For older clients, a comprehensive affordability assessment of income and expenses is crucial before exploring potential options, which must be communicated in an understandable manner.
Rethinking Mortgage Solutions for the Elderly
The FCA advises against immediately resorting to lifetime mortgages or equity release as default solutions for elderly homeowners. Instead, other mortgage types, often not traditionally offered to older age groups, such as repayment, interest-only, and retirement interest-only mortgages, might be more suitable and cost-effective in the long term.
The Ever-Changing Circumstances of Aging
The survey underscores the fact that life circumstances can change rapidly for anyone, a situation that becomes more pronounced with age. This highlights the need for continuous attention to the financial and health needs of the older population, especially in times of economic hardship.