“If one-in-four individuals might need social care, not being in a position to fund that or being in a position where you require care and as a result all your financial planning is thrown up in the air, that’s not a good outcome. That is a foreseeable harm,” he added.
Cameron believed once there was a concrete deal, advisers would be in a position to help with advice in this area and it would become part of offering retirement income advice.
Providers’ role
In terms of what providers could offer to help advisers with this area, Cameron said some in the industry are in favour of a type of insurance contract.
“If you meet certain criteria and you need care then a person could buy an insurance product and it will pay out at that point in time when you need the care,” he explained.
However, Cameron felt the problem with this approach was if one-in-four people needed care that would become quite expensive for people.
Cameron suggested drawdown could be a way to allow people to fund their social care.
He said: “When you go into retirement, if a client is in a position of having quite a substantial pot, you go into drawdown. If a client knows they will need to use £86,000 for care they could notionally ring fence that. It would still remain in their pot but they just wouldn’t use it.
“Advisers could help the client to manage that and they would draw their income from the remainder of their pot and keep the £86,000 should they need it.”
Cameron questioned how social care funding fit into the FCA’s aim of supporting more individuals get the help they need at a price they can afford.
He said: “This is an area where it would be very difficult to offer simplified advice. It requires such a holistic assessment of the individual but I wouldn’t want to rule out some sort of targeted advice for individuals who are in retirement.
“[These could be people] who simply want to get some advice on how to rearrange their wealth because they know they are approaching the point where they might need social care.”
alina.khan@ft.com
