The standards required of independent financial advisers in relation to long-term care are ‘simply not high enough', a Labour peer has warned.
Speaking in the House of Lords on a debate on long-term care and financial advice, Lord Lipsey warned: "I am not convinced that the standards required of independent financial advisers operating in this field are sufficiently high.
"Too many advisers sell too much on the basis of too little knowledge. The standards are simply not high enough. I exempt, as of course I would, SOLLA-qualified advisers, who are very fully trained and equipped-but others are not."
Lipsey also warned that many advices were fearful of regulation such as potential mis-selling complaints.
He said. "There is something about in the industry that I would call the fear of FOS-the Financial Ombudsman Service. Many advisers who could play a very useful role for society and themselves by getting into this business are frightened that, although they sell the policies reasonably honestly, they will be found to have mis-sold them by FOS and will be forced to pay huge amounts in compensation."
The peer added this is something the government needs to address to have advisers available.
In response, Kay Ingram, divisional director of LEBC Group Ltd said: "We understand Lord Lipsey's concerns about the need for specialist independent financial advisers to be better qualified. Planning for care costs is a highly complex area that requires an understanding of care fees rules and benefits, investment markets and family dynamics. There is no single product solution and the advice has to be reviewed as care costs needs change."
Lipsey also warned about potential complexities for financial advisers in terms of legislation timescales.
He added: "Can noble Lords imagine how in that intervening year a financial adviser is to explain, let alone provide sound advice, to a client? It is simply impossible. What happens if someone comes to him a few weeks before the new benefit rules come into effect?
"Does he tell them to take out a deferred payment or not, when that benefits scheme may pay a lot of those costs? This is simply mad. The Minister will be glad to hear that if he agrees to reconsider his policy on this-and I hope that he will discuss it with his colleagues-the government would actually save a bit of money.
