Elderly people could for the first time be given extra protections to stop them being ripped off or discriminated against when they buy mortgages, insurance, and savings products, as watchdogs launch an investigation into financial ageism.
The Telegraph understands that the Financial Conduct Authority could enforce a new “anti-ageist” regime within a year in which firms may be banned from discriminating against customers because of their age.
On Monday in a Parliamentary meeting chaired by Conservative MP Nusrat Munir Ul-Ghani, the regulator will unveil a new and far-reaching paper outlining growing concerns by charities and industry bodies about financial needs of Britain’s rapidly ageing population.
In the report Britain’s largest charity for elderly people, Age UK, will recommend that the FCA reviews financial companies’ special exemption from the Equality Act, a hole in the law which currently allows them to discriminate against the elderly.
Last night legal experts warned such a move would be “foolish” as it would drive up overall costs and lead to younger generations paying thousands of pounds more for financial products.
A major area of focus for the FCA will be ageism in the mortgage market as borrowers in their 40s and 50s are being told they are “too old” when they apply for loans. In recent years the Financial Ombudsman, the arbiter of disputes, has upheld a number of mortgage grievances relating to older borrowers complaining they were unfairly rejected by lenders.
The FCA could also introduce rules to prevent elderly people who do not use smartphones or the internet from being unfairly excluded from preferential online deals and services. For example DIY investors who use the telephone to buy and sell shares, are being charged as much as £472.50 more a year than people who trade online, Telegraph research shows. Superior credit card deals can also be found online with the average balance transfer deal for cards bought online 25 months long, compared to just 11 months offline.
The watchdog also told this newspaper it has held private talks with big banks and financial institutions to “nudge” them into innovating new technology to improve safety and security for ageing customers. Banks including HSBC and Barclays will soon roll out voice and touch recognition systems to make logging in easier for customers who struggle to remember their PINs.
Robin Ellison, a partner at Pinsent Masons, a law firm, said: “It is foolish to want equal financial treatment for people who aren’t really equal, because it just puts costs up for everyone else.”
“The hundred thousand dollar question for the FCA is: can financial companies statistically discriminate against older people or are companies’ policies based on outdated views? If there is a genuine reason for discrimination then it should be allowed.”
Jane Vass, head of public policy at Age UK said: “Financial policies must be calculated on accurate information upon which its reasonable to rely. We are concerned that risk pricing is not always based on good evidence.”
A spokesman for the British Banking Association said: “Banks realize that using the latest technology is not for everyone. The industry will continue to work with Government, consumer groups and the third sector to ensure that no customer is left behind. We fully support the FCA’s efforts to further improve services for older consumers.”
Linda Woodall, director of life insurance and financial advice at the FCA, said: “It is great news that we are living longer but we do have to ask ourselves whether financial products are keeping pace with the needs of tomorrow. We want to form a comprehensive view of the new challenges facing our ageing population and establish whether the regulatory settings are good enough.”
While many people will support the FCA in its bid to protect the elderly and their money, sceptics may argue such investigations are little more than pointless meddling, and will end up burdening the rest of society with extra costs.