Survey: Financial firms ‘no plans’ to meet older clients’ needs as FCA warns of ‘potential harm’

Stress-retirement-income-savings-pensionThe majority of UK financial services firms have no plans to provide a tailored service for older customers or engage with regulators on market access issues, a CBI/PwC survey shows, as the FCA calls on the industry to do more in the findings from its Ageing Population Project.

Last week the FCA published an Occasional Paper on how the ageing population will impact the financial services industry, following the launch of the Ageing Population Project in February 2016.

The FCA warned there are risks that older customers’ financial services needs are not being met, which could result in poor customer outcomes and potential harm and said there is scope for financial services firms to do more. The regulator suggested a further review in three to five years to monitor how the financial services industry is adapting to meet the needs of older consumers.

The CBI/PwC Financial Services Survey shows UK financial services firms currently offer a limited range of strategies to older customers and only around a quarter has reviewed the needs of older clients.

While 61 per cent of asset and wealth managers have ensured older customers can access their services and 36 per cent have adapted their communications, only 27 per cent have undertaken a business-wide review of the needs of older customers, although a further 29 per cent plan to do so.

However, the majority of firms have no plans to provide tailored advice for older customers, train staff on their needs or develop age-appropriate products or services, the survey found.

Meanwhile UK asset and wealth managers plan to ramp up their marketing spend to counter intense competition in the industry over the coming year, the CBI/PwC survey shows.

While asset and wealth managers have reported an increase in overall profitability with an uptick in business from private individuals, financial institutions and overseas customers, the firms are wary of increasing competition affecting their businesses.

As such, firms have outlined their plans to invest in their people, land and buildings, technology and marketing to ensure they are well placed to drive productivity while also meeting regulatory requirements, data from the CBI/PwC Financial Services Survey shows.

Elizabeth Stone, UK asset and wealth management leader at PwC, says: “Despite ongoing uncertainty, the investment industry continues to increase its reach across the financial services sector and the optimism shown in this survey reflects the industry’s ongoing growth and rise in assets under management.”

Stone adds that the looming Mifid II deadline is galvanising investment in technology, which is necessary to analyse and coordinate large amounts of data, with investment in IT expected to rise at the fastest pace in two-and-a-half years.

“It’s interesting to see the industry concerned about a lack of adequate return on their investments and I would call on firms to view the time, energy and money they have invested in compliance and technology as a strategic opportunity,” Stone adds.

However, she says firms’ investment in their business “isn’t just about getting over the line in time for Mifid II or the General Data Protection Regulation”.

“Firms need to think outside the box and use the new systems, skills and data they have built during compliance to understand more about the market and their customers. Competition undoubtedly remains intense and is increasingly coming from a number of angles – life insurers and emerging start-ups continue to push into the traditional asset and wealth management space. This pressure is leading firms to invest heavily in their brand, as they focus on cross-selling to existing customers.”