Question mark remains over compulsory examinations and training proposed by FSA
Advisers wishing to voice their opinion over the Financial Services Authority's (FSA) proposal for compulsory examinations for the selling of long term care (LTC) insurance should do so now, according to David Jackman, head of industrial training and business ethics at the FSA.
Speaking at the first IFACare conference in Stratford-upon-Avon, Jackman revealed there was a question mark over whether there should be compulsory training and competency requirements for LTC. He said that to date, most responses to CP160 were against compulsory tests.
'It seems to be drifting away from compulsory exams,' he said.
While Jackman stressed there was a need for examinations about products in a higher risk category, he informed advisers the decision was 'not a done deal' and told advisers opposed to compulsory exams it was worth lobbying individually to get their voices heard.
'LTC is coming under FSA regulation at the end of October 2004, it is a tight timetable and a lot has not been established, so now is the time to voice your opinions,' he said.
Delegates questioned the proposed regulatory regime further by calling for LTC insurance to be included under the retirement planning module proposed in CP157. Attendees agreed the LTC market was not solely about insurance, but that equity release schemes and an understanding of care options were also an integral part of the process.
Jackman admitted that LTC insurance does have a place in the retirement planning module, but would not reveal whether any changes are likely to be made.
'In CP157, I proposed a module called retirement planning and arguably long term care should be in there. It certainly highlights the tension between education and regulation,' he said.
Jackman was also quizzed on the FSA's approach to the education of lawyers and accountants when advising clients on LTC options. He said the examination review should help to clarify any blurred boundaries, but admitted it was not an easy task.
'The examination review will help to differentiate between those who are 'grandfathering' and those who are qualified. It will make a clear distinction between advisers and planners. I have never understood why there is not more of a distinction between what is essentially flogging a product and holistic financial planning. However, I am not sure the political will to carry this out is there. The cost of training and exams for lawyers would be hugely expensive.'
Jackman added the difficulties lie in consumer opinion: 'People going to see an adviser think they are getting holistic advice and often they are not. The public are bamboozled by it and it is important they know what they are getting.'
Speaker Nigel Dua, chief executive of the Residential Care Homes Trust, also highlighted a lack of knowledge of the LTC industry. In his speech, Dua called on advisers to help tackle the crisis facing the industry.
Referring to the 2002 Joseph Rowntree Foundation report, Calculating a Fair Price for Care, Dua said there was a £1bn black hole in care home funding. This, coupled with a loss of 50,000 LTC beds in both public and private sectors, have contributed to a crisis, he claimed.
'There is a massive gap in fee levels in care homes. The so-called free nursing care scheme is nothing of the sort. Government failure for five years to recognise the growing black hole in social service spending and inaction in the face of care home closures has led to a care crisis. The black hole in social service funding needs to be tackled.' he said.
