Why getting older means getting a worse deal

The elderly suffer disproportionately from bank branch closures and insurers’ use of ‘no-frills’ policies, writes Sam Barker

The financial well-being of the elderly and vulnerable is being harmed by bank branch closures, the pricing of travel insurance policies and insensitive staff at many organisations, MPs have been told. In the worst cases, customers may be denied access to certain financial deals.

Examples were laid out this week before the Treasury Select Committee, which is investigating how the vulnerable can face financial exclusion or be forced to pay more than other customers.

Vulnerable consumers include the elderly, the blind or partially sighted and those with mental health conditions.

Bank branch closures

The committee heard that the closure of bank branches hit all three groups. Britain has lost 53pc of its bank branches since 1989, largely as a result of the growth of online banking. Financial firms are also increasingly moving away from sending out paper documents.

But these trends are causing people who prefer face-to-face banking or who struggle with the internet to be left out.

Jane Vass of the charity Age UK told the Treasury Committee that bank branches “retain huge importance for older people”. When they shut, pensioners who prefer face-to-face banking either lose access altogether or have to rely on others to help them, losing their independence.

When bank branches close, it is sometimes possible to bank at a post office. However, this service is not available to customers of all banks and is limited to basic banking such as paying in and withdrawing cash.

Ms Vass said that while some elderly people were happy to use post offices as a replacement for bank branches, others were not.

She said: “No one really knows what’s happened to the most vulnerable people whose branches have closed. Are they using the post office? Does it meet their needs? There should be another look at the sharing of bank branches.”

Bank branch closures are also a problem for the partially sighted. Eleanor Southwood of the Royal National Institute of Blind People (RNIB) said many blind people liked to use “chip and signature” bank cards but that was not possible in post offices.

Travel insurance

Travel cover can also be inaccessible to the vulnerable, MPs on the committee heard. For example, many travel insurers may not insure you at all past the age of 65. Others charge high premiums. If you have a preexisting medical condition, getting travel insurance can be hard.

Many elderly people travel with no insurance at all, according to Ms Vass.

Travel insurers can also charge high prices to those with mental health problems. As a result, half of people who have had a mental health condition do not tell their travel insurer, according to Katie Evans of the Money and Mental Health Policy Institute. She said some insurers used murky processes to work out their prices. “This industry is not very transparent,” she added.

One insurer said that competition among large insurers to keep prices down had led to customers being shut out. This is because insurers can restrict what policies cover to remove cost. They may remove cover for certain medical conditions, for example.

Smaller, specialist insurers can often help but they are harder for customers to find. A spokesman for the British Insurance Brokers’ Association said an advertising campaign to promote these firms would help and could be

funded from existing fees paid to the City watchdog, the Financial Conduct Authority.

Mortgages

Older homeowners with interestonly mortgages are also struggling, experts say. Many of this group are coming to the end of their mortgage term but cannot repay the outstanding loan.

Some struggle to get approval for another mortgage because many firms will not lend to those aged 65 or older.

Mark Arnold of Kensington Mortgages, a lender, said: “Mortgage lenders should start offering longterm loans to suitable candidates, provided that they meet the criteria, so that people don’t need to worry about being homeless in the final decades of their lives.”

Cash, cards and websites

Restricted access to physical cash, bank cards, websites and apps is also a problem for the vulnerable. Ms Southwood of the RNIB said new banknotes had raised dots and text to help identify the denomination.

But bank cards vary, with some not offering helpful features to the partially-sighted. With websites and apps, she said information was not always presented in an accessible way.

Insensitive staff

Interactions with the staff of financial services firms can also shut customers out. Ms Vass said this could happen with power of attorney, arrangements where someone is appointed to handle another person’s legal and financial affairs.

Bank staff sometimes ignore the elderly person who has appointed an “attorney” completely and insist on speaking to the representative even when the circumstances did not call for it. However, Ms Vass said banks are improving in this respect.

Staff can also cause anxiety for those with mental health problems by asking them to answer sensitive questions that bring back past trauma, for example.