Judy Terry is a marketing professional and a former local councillor in Suffolk.
A prominent national advertising campaign is attempting to remedy the PPI scandal, encouraging people to check their bank and credit card records for evidence of unknowingly signing up to unwanted insurance cover, and claim compensation. But I wonder if another potential scandal is now brewing – this time on the way some organisations target older people, especially vulnerable older people.
Some charities were previously in the dock over the way they abused generous pensioners, who made regular, often unaffordable, contributions – pursuing them with endless mailshots and calls; methods largely curtailed following an energetic media campaign, although families weren’t offered any compensation for the stress (and financial losses) their elderly relatives suffered.
However, we now see a range of direct mail shots for everything from household and car insurance, to insuring against funeral costs, drainage claims, and even offering equity release.
What concerns me most is the tone of some material, designed to scare people, and the way organisations attach partially completed application forms, pre-paid envelopes and – frequently – options for ‘a welcome gift’.
Surely this is a safeguarding issue for local authorities and councillors; something to raise with the Financial Conduct Authority (FCA), which is already investigating how the financial services industry treats older customers, and is due to publish its recommendations later this year.
It is already clear that elderly people are punished for their loyalty, highlighted once again by a Sunday Times report of a 91-year-old paying over £600 more for household insurance than an equivalent deal available through a comparison site because she hadn’t challenged the automatic annual renewal with her bank. Unfortunately, too many of us did exactly the same until a trusted source of advice (in my case the BBC’s ‘You and Yours’) triggered action, and significant savings.
Inevitably, the small print in promotional literature is designed to protect the provider, but it is so small that it is unlikely to be read, especially by those with poor eyesight. For example, an over 50’s funeral package ‘contains information on how the plan works, and cash sums available, as at the date of the letter…the plan described in this letter may be withdrawn from sale at any time… we’ll let you know when you apply’. For most applicants it would be too late, having signed up on the basis of the offer in the mailshot, and provided Direct Debit details.
Over the last year I have become increasingly annoyed by regular mailshots from a water company’s insurance partner, offering a range of plumbing services. In particular, warning about the number of plumbing and drainage incidents in my postcode, and the potential costs likely to be incurred to remedy damage.
Although, according to Citizens Advice, homeowners are responsible for ‘repairing the supply pipe… but most water companies offer one-off free repairs or subsidised repairs’. This is only mentioned in the accompanying (small print) information booklet, which states, ‘your local water company may provide a free one-off repair service to your external underground water supply pipe… contact them for details’.
And it is only on the second page that potential customers are advised to ‘check that you’re not already covered by other policies, such as your home insurance’.
In fact, most home insurance policies do offer cover for such emergencies. Nevertheless, the company has a special 75p per month (£9 per year) introductory offer for the first year, with a promise of a reminder before renewal, when the cost rises to £99 a year. Ironically, by purchasing this package, customers are ‘agreeing to enter into a contract with….’ naming one of the largest mainstream insurance companies, which no doubt already provides home insurance to a high proportion of the targeted customers and covers such contingencies.
From my experience as a councillor, working with older people, especially widows, it is easy to alarm them into making unnecessary financial commitments because their husbands had always managed these issues, without any discussion. And they are too trusting of what they read when it lands, unprompted, on the doormat. At least, if they see a TV commercial and request information, they are making a conscious decision.
This is another reason why there are growing concerns about the risks of equity release (sometimes called a lifetime mortgage) and the level of interest charged. Unlike a traditional home loan, borrowers live in their homes without making monthly repayments, so interest accrues until the debt is settled, usually when the borrower dies or goes into care, and the property sold. A recent report quoted £11 a day interest on a nine-year-old £40,000 loan. Ouch!
Energy prices is also a sensitive issue. How much is added to costs by commission paid to national retailers for selling energy packages to their own customers. Leaflets are available in supermarkets, and occasionally one is accosted on entering a store, with someone trying to pressurise people into signing up for a new deal. It’s worth remembering that something like 10m people don’t have access to the internet to compare value for money – and it is more likely to be older vulnerable customers who succumb to the charm offensive, but without necessarily getting a better deal.
Councils have a great many responsibilities, but they could work with their local media, including radio stations, and use their own website and mailshots (such as council tax) to encourage people to take advice. Perhaps students, who are so skilled in IT, could volunteer a few hours a week to run regular sessions using price comparison sites in local libraries to help those who are not quite so savvy, and are fearful of change. Employers ask for good communication skills, so it would look good on CVs. There are also social benefits to both young and old, sharing learning experiences.
Trust and loyalty are old-fashioned values, undermined by some poor practices; it is time they are revived. Businesses would be surprised by the result: loyalty and trust leads to a strong and reliable customer base. Just don’t rip them off.