Treasury bows on elderly care

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The Independent Online
The Treasury bowed yesterday to sustained lobbying from the insurance industry and agreed that the selling of long-term care products to elderly people will be fully regulated under the Financial Services Act.

Angela Knight, the Treasury Minister, said the initiative was being taken in order to protect consumers and give them confidence to invest.

Research by Munich Re, a leading insurer, suggests the market for long- term care products could be worth up to pounds 10bn a year. Sales of home-income plans, where homeowners surrender part of the equity in their home in return for a guaranteed income, could be worth pounds 100bn.

The Treasury's decision reverses an earlier view by Stephen Dorrell, the Health Minister. In a consultation document earlier this year, Mr Dorrell argued against regulation on the grounds that this would stifle competition and innovation.

Garry Heath, chief executive of the IFA Association, the trade body for financial advisers, which had argued in favour of tight regulation, said: "I am delighted. These products involve huge amounts of money changing hands. We will be pushing for advisers to be properly trained to advise on these products."