Perseverance and patience are both virtues members of the Long Term Care Working Party (LTCWP) have had to practise – but then they have had time to. The party, which was established by Martin Telling, author of The Complete Guide to Long Term Care
, held its first meeting five years ago.
It received substantial industry support, as Telling explains: “It was attended by all major providers of LTC products, as well as reinsurers, the Association of British Insurers (ABI) and key IFAs.”
Initially part of the IFA Association (IFAA), it was established to discuss issues relating to LTC and promote the market. Members include IFAs, insurance providers, reinsurers, the ABI and IFACare.
More recently, it made news as it moved away from IFAA to join the Society of Financial Advisers (SOFA) in June this year. Chairman Margaret Borwick says that the move to SOFA reflects the “holistic approach the working party has towards LTC”.
The LTCWP has three principal objectives: training, lobbying and product development. “At the moment we are most concerned with the training aspect,” says Borwick. “LTC is a highly complex area and we want IFAs to be as informed as possible.”
Currently, a specific LTC qualification does not exist. Although sections of the Advanced Financial Planning Certificate, paper G80, do cover LTC, most believe that it is not as thorough as it should be. This means that many IFAs may be selling LTC without adequate planning and product knowledge. It is a serious issue for both IFAs and the LTC sector as a whole. Should a mis-selling crisis arise, the implications for the market would be devastating.
Perhaps this is why IFAs have shown keen interest in learning about LTC products. Providers report that more than 4,000 IFAs have made enquiries about how to sell the product. But implementation of an education system is not a simple exercise and, since it began looking at the issue, the LTCWP has encountered a number of obstacles.
Fundamentally, there is the reluctance among some providers and IFAs to introduce a formal accreditation. This stems from the market being as young as it is and still subject to change. Additionally, it is feared that demanding a formal qualification may deter many IFAs from selling the product.
However, the main difficulty with training IFAs is that the provision of LTC is in a state of flux and uncertainty. The combination of changing tax laws, the ever-impending, though never materialising, reaction from the government to the Royal Commission and the introduction of new product designs means that the industry is essentially fluid. Setting comprehensive assignments for IFAs could be problematic: “There is continual advance in the market,” acknowledges Borwick. “A set of questions can be relevant one minute and not the next.”
This is why the first meeting under SOFA, which was held on July 6, was dedicated to the discussion of education – with most attention aid to the formulation and launch of a training scheme. It has been decided that, when the scheme is fully developed, it should embrace the LTC market as a whole, instead of focusing on products. Borwick explains: “While it would provide knowledge on products, it would also address areas such as the NHS, demographics and the community care act. This is about fitting products to client needs, so all these factors are important.”
LTCWP members have already agreed to initiate the first stage of a training scheme. Any training should be set at a level synonymous with the Financial Planning Certificate (FPC). However, ultimately, Borwick would like to see LTC fully integrated into the FPC. “We need to set the highest standards for IFAs with broad planning and product knowledge,” agrees Clare Parkes, development manager of SOFA. “Although LTC is mentioned, there is not enough detail,” she says.
Computer Based Training (CBT) has been advocated as the most practical medium to convey the information. “The CBT mechanism is a quick way of learning basic facts as it is cybernetic, giving instant feedback,” explains Borwick. “It means IFAs can learn interactively, so it’s a good use of time.”
Also under discussion are plans to create an Internet version of the training document which would address the problems of a changing market. “It would be logical to use the Internet as a facility for keeping materials up to speed,” adds Parkes.
However, Parkes is also a believer that the evolutional nature of the LTC market means that setting a formal accreditation would be impractical. “It is impossible to examine on anything that is constantly changing” she says.
The emphasis on education has not deflected the LTCWP from its other goals. Its other objectives include’ publishing a list of approved IFAs to allow clients to be certain the advice they receive is holistic and as up to date as possible.
To address current industry related issues, the LTCWP has enrolled authorities from the legal and political fields as well as an expert from the rehabilitation and therapeutic field. By integrating specialists with extensive experience of the LTC market, the working party hopes to broaden discussion and ensure IFAs are as informed as possible.
Margaret Richards is the solicitor who applies her legal experience to the financial services industry on behalf of the LTCWP. Her knowledge of issues relating to the care of the elderly stems from her position as representative for Solicitors for the Elderly and as editor of the Elderly Client Adviser.
“LTC is a very difficult and relatively new area and there is a lot of misunderstanding,” says Richards. “Issues are detailed and knowledge of a single rule can be very important.”
At the most recent LTCWP meeting, Richards submitted a number of remarks regarding the legal complications of LTC. These issues have not been helped by the absence of clarity from the government, and this has beep reflected in low sales of LTC insurance products. Cases such as Coughlan vs North and EastDevon Health Authority
, which dominated headlines last month, have also raised public concern. Pamela Coughlan had received NHS care ever since she was severely disabled in a car accident 20 years ago. She was promised this would continue for life. However the health authority decided to close her Exeter nursing home and move her to a local authority residential home. Coughlan discovered she would then become the responsibility of social services, under which the patient is not automatically entitled to care free of charge as means-testing applies. Coughlan took the case to the High Court which ruled in her favour, deeming the authority’s attempts to break the promise to Coughlan as an abuse of power. Richards believes that deeper knowledge of legislation would mean IFAs would ultimately be able to offer better advice. She explains: “A person must be widely skilled otherwise there is a risk, as with the pensions mis-selling scandal, of a huge comeuppance.”
This raises the topic of regulation – effectively, an unavoidable subject for the LTC market. However, the LTCWP maintains that establishing yet another code of conduct in the insurance market is inappropriate, as there are already so many. “We don’t support having a code of conduct for everything a financial planner gets involved in,” says Robert Reid, chairman of SOFA. “SOFA certainly wouldn’t support another code being launched. But it would seek to ensure that existing codes covered elements of LTC.”
But this is just one of the many issues surrounding the LTC market in its current state of flux. Rehabilitation techniques and therapies are another area of growing importance to the LTC industry. As well as providing comfort to those who are suffering, rehabilitation promotes the highest possible state of independence and can impact on costs.
Addressing this, the working party has enrolled the expertise of Rosemary Hurtley, senior therapist at Pentland Health Care, who has broad experience of rehabilitation of the elderly. It is hoped that her presence will broaden discussion and also provide guidance for IFAs and their clients.
“Looking ahead it seems that rehabilitation may allow the elderly to look after themselves and so need less care,” says Borwick. “When people first go into nursing homes they are often at their worst ebb and it is difficult to tell if they will recover or deteriorate. Good rehabilitation can extend life by three or four years, so there are obviously cost implications.”
The LTCWP is also increasingly active in product development, and plans to campaign for increased efficiency and service. Advocating cooperation above competition, it wants to see providers working together to devise and promote common standards.
Borwick uses the example of immediate needs plans, currently provided by nine insurers. “To get a quote, an IFA has to fill out nine underwriting forms. This is time that the client has to pay for – so the working party will campaign for just one form,” she says. “It is a similar idea to the critical illness working party’s development of core terms.”
What is vital for the working party is that action is finally underway and, albeit slowly, it is gaining attention from all corners of the industry. “The role of the IFA is very important in LTC anyway and educational standards are needed,” says Peter Barnett, care services manager at reinsurer Swiss Re. “So, although I think there should be a single body, the LTCWP is a group we foster for both intellectual and economic reasons.”
A sentiment made possible by the hard work and perseverence of the working party itself.
The next meeting is to be held on September 2 at Swiss Re’s London offices.