Those who advise the elderly must be tested

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The Independent Online

The Financial Services Authority has backed down on controversial plans to exempt existing financial advisers from taking a new exam on long-term care insurance, after several pressure groups highlighted the low standards among many of those who advise the elderly.

The Financial Services Authority has backed down on controversial plans to exempt existing financial advisers from taking a new exam on long-term care insurance, after several pressure groups highlighted the low standards among many of those who advise the elderly.

Under proposals published last September, the FSA said it planned to introduce a mandatory exam for all those who wish to advise on long-term care products in the future, but would allow existing advisers to skip the qualification.

However, one mystery shopping exercise carried out last autumn revealed that the majority of high-street advisers were ignorant of the complex benefits system and specialist products available for those looking to plan for a move into a care home.

Many elderly people have been wrongly advised to sell their homes to pay for care fees, or forced to waste their savings on unsuitable financial products. Most advisers had not even heard of immediate needs annuities, which ensure all care fees are covered for the rest of a policyholder's life.

Dan Waters, the retail policy director for the FSA, said: "During consultation, concerns were raised about the need for all advisers ... to demonstrate their competence in this complex and specialist field. We support this view and have decided to require existing long-term care advisers as well as new advisers to pass an appropriate examination."

The news comes as Bupa, the last major provider to offer pre-funded long-term care insurance, pulled out of the market this week. Pre-funded policies are those taken out to insure against possible care home liabilities in old age, as opposed to immediate needs products, which aim to deal with the cost of care at the point of need.

Sales of pre-funded policies have plummeted in recent years, with PPP, Norwich Union and Scottish Widows pulling out of the market in the last six months. The market's demise is a blow for the FSA, which has just finished completing a new set of regulations for the sector.

Owain Wright of the Care Funding Bureau, a specialist adviser, said the death of the product illustrated the public's increasing reluctance to make preparations for the possible cost of nursing care in old age.

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