People should be ‘nudged' towards independent regulated financial advice when considering how they will fund their long term care, the government has said.
Parliamentary Under-Secretary for the Department of Health Earl Howe told the House of Lords last night that local authorities "should take a proactive role" in pointing people towards financial information and advice regarding long term care funding.
"We want to ensure that when people take decisions about how to fund their care it is done in a considered and informed way. We agree that the local authority has a pivotal role to play in ensuring that this happens.
"It is particularly important for self-funders that this includes the relevance and the availability of regulated independent financial advice...this should be a facilitative role for the local authority, providing a nudge in an appropriate direction," he said.
Handing out a leaflet or placing a page on a website is not sufficient, said Howe.
"It would not be sufficient for local authorities just to tell a person about the types of information and advice available. They will also have to explain how it could be accessed and provide information to enable them to do so."
Howe told the Lords there is "more work to be done" before the government can finalise what the guidance on advice for long term care will say, however he pledged to continue working with the financial services industry to "get it right".
The Association of Professional Financial Advisers (APFA) has called on the government to amend the bill - Caring for our future: Consultation on reforming what and how people pay for their care and support - to include a provision whereby any fees incurred for peoples' financial advice would be included within the £72,000 cap on care costs.
APFA also lobbied for an amendment requiring local authorities to facilitate peoples' access to advice from a regulated firm.
The government rejected that amendment in July, however Howe's comments last night pointed to a shrinking of the distance between the government's position and APFA's.
Under current plans for the bill, which is still going through Parliament, councils only have to refer people to advice that is independent of the local authority, such as the Money Advice Service, charities and other organisations.
APFA director general Chris Hannant said: "We welcome the bill's requirement for local authorities to provide information and advice that helps people make decisions about paying for their care.
"However, we believe it should go further and include a requirement for local authorities to facilitate access to advice from a regulated firm. Funding care needs will involve making far-reaching financial decisions, and many people would find the input of an adviser helpful."
"We recognise that for some, the costs attached to seeking advice on care issues may be prohibitive.
"APFA is therefore proposing that a provision should be included in the Bill whereby any fees incurred would be included within the £72,000 cap on care costs. This, we hope, would mean people aren't put off from seeking advice because of concerns over the cost."
APFA also suggests:
• Local authorities have a list of regulated firms in their area that have agreed to give financial advice on long term care.
• These firms will provide an initial consultation, at no charge, in which they will explain the options for paying care fees. They will also explain the options for the client if they wish to receive further advice, including how fees would be charged.
• In the event that the client would like further advice or a product is to be purchased, fees will be charged but will count towards the client's £72,000 cap. This will mean the individual is not disadvantaged financially in the longer term.
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