While those with dementia need financial support more than those without, there are no rules to prevent financial advisers from selling products to them. Advisers are entitled to contact those suffering from dementia or other conditions common in old age, advertise their products and sign up new clients, regardless of their mental health.
Last month one of Britain’s largest wealth managers, St James’s Place (SJP), was found to have given “unsuitable advice” to an Alzheimer’s sufferer. The Company convinced the man to move his ISA to them, even though it meant incurring higher charges and there was nothing to suggest he was unhappy with his current provider. Further, the person who was in the process of obtaining Lasting Power of Attorney to assist the man with his financial affairs was not included in the discussions. SJP was ordered by the Financial Ombudsman to pay up to £300 in advice charges to the Attorney to help her decide what to do with the SJP investment. Further the Ombudsman ordered SJP to pay £250 to the Attorney in recognition of the trouble and upset it caused by the way it dealt with the complaint. This is not an isolated case – the FOS has dealt with 28 similar cases since January 2015 where the complainant had either Alzheimer’s or some other form of dementia.
The income of advisers working for SJP is dependent on how many sales they make and if they do not bring in sufficient money from clients every year, they are warned that they risk “a lower standard of living” – according to the Sunday Times. For the past 10 years, the Company has enjoyed a relationship with Sunrise Senior Living, a care home company that runs 27 establishments across the UK. Through Sunrise, SJP has hosted events at Sunrise’s care homes offering free advice on topics such as wills and pensions, paying for care, annuities, tax efficient inheritance planning, savings, benefits and general investment advice. These sessions are described as ‘independent’ even though the advisers only sell SJP products. However, Sunrise says it is now reviewing the relationship as it was not aware of the advisers’ pay structure.
Around 850,000 in the UK are living with dementia and it is expected that this number will rise to more than 1 million by 2025 – reaching 2 million by 2051. Vulnerable adults are in need of financial advice but they may not be aware that the advice given is not independent. The FCA raised this as a concern in 2015, noting that vulnerable adults may be “significantly less able to represent their own interests, and more likely to suffer harm”. The Chief Inspector of Adult Care at the Care Quality Commission Andrea Sutcliffe has called the practise of signing people up to financial products who don’t have a full understanding “completely unacceptable”. She notes that whilst current care home regulations do not cover the specific situation, the CQC’s expectations of a well led care service would include that it would not allow this to happen.
If you have a vulnerable elderly relative or friend, obtaining a Lasting Power of Attorney for Financial Decisions will allow you to manage their bank accounts and savings for them. If they are in residential care, you can notify the care home so that they are aware you have responsibility. A diagnosis of dementia does not automatically prevent them from making an LPA – they can still sign this document provided that they fully understand what they are signing and its implications. If they have already lost the ability to make this decision, you can apply to the Court for a Deputyship Order which gives you similar powers to an LPA. However, the process is more complex and expensive – so making an LPA while this is still possible is highly advisable. Speak to our Later Life Planning Team to find out more.