FSA says it will actively supervise new LTC products
The FSA says it will be actively supervising the development of new long-term care products in the wake of the Dilnot report on long-term care funding.
The Commission on Funding of Care and Support published its report and recommendations on care funding today.
It calls for a £35,000 cap on individual costs of care, an increase in the means-tested threshold from £23,250 to £100,000, and capping general living costs to between £7,000 and £10,000 a year.
Economist Andrew Dilnot, who chaired the commission said the recommendations should help open up the financial services sector to develop new products for the long-term care market. He said the sector was previously put off the long-term care market as they faced uncapped liability on costs.
In a letter to the Dilnot commission dated July 1, FSA interim managing director for the conduct business unit Margaret Cole (pictured) said the FSA had a close interest in the development of private sector solutions to care funding.
She says: “We will be active in supervising the development of new products, especially in light of previous problems with pre-funded long-term care insurance. Indeed, under our consumer protection strategy, we intend to increase our focus on product design and governance more generally, to try to avoid customer detriment.
“We are also happy to be involved in working groups to consider improvements to the standards of advice for products that meet care fees funding needs. Such products can be complex and consumers may need additional protection.”
In a consultation paper on regulation of long-term care insurance in 2003 the FSA noted the long-term care product range was complex, and risked inappropriate cover depending on the state benefits provided combined with the insurance.
Long-term care insurance products were also found to be expensive and generally only bought by wealthy individuals.