Chapter 1: Long term care, the background

Question 1

How does the FCA define a long term care insurance (LTCI) contract?

Answer 1

1) Which provide at the policyholder’s option, or is sold or held out as providing, benefits that are payable or provided if the policyholder’s health deteriorates to the extent that he cannot live independently without assistance and that is not expected to change.

2) Under which the benefits are capable of being paid for periodically for all or part of the period that the policyholder cannot live without assistance.

Question 2

How does the FCA/PRA regulate pure protection contracts for long term care?

Answer 2

As “high risk” and as Designated Investments

Question 3

Of LTCI contracts which products fall under pre-funded and which fall under immediate need?

Answer 3

Pre-funded = Pure Protection, Long Term care bond

Immediate Need = Immediate need annuity, Deferred care annuity.

Question 4

What are the three cross-cutting rules of the FCA Consumer Principle, under consumer duty:

Answer 4

A firm must act in good faith towards retail customers.

A firm must avoid foreseeable harm to retail customers.

A firm must enable and support retail customers to pursue their financial objectives.

Question 5

What are the four key consumer outcomes all firms must comply with?

Answer 5

Products and services – the design is fit for purpose;

Price and value – this isn’t a price cap but it is a clear FCA warning that firms cannot charge whatever they feel they can get away with;

Consumer understanding – goes beyond just transparency and how products and services are communicated; and

Consumer support – requires firms to give customers what they have paid for without unreasonable barriers.

Question 6

How does the FCA define a vulnerable customer?

Answer 6

‘Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.’

Question 7

The FCA has identified four characteristics to define the range of vulnerabilities, what are these?

Answer 7

• Health – health conditions or illnesses that affect ability to carry out day-to-day tasks.
• Life events – bereavement, job loss or relationship breakdown.
• Resilience – low ability to withstand financial or emotional shocks.
• Capability – low knowledge of financial matters or low confidence in managing money (financial capability). Low capability in other relevant areas such as literacy, digital skills, or understanding of the English language.

Question 8

What will the Financial Services Compensation Scheme (FSCS) offer?

Answer 8

The Financial Services Compensation Scheme (FSCS) may pay compensation if an authorised firm (insurer or adviser) is unable, or likely to be unable, to pay claims against it. This is usually because it has stopped trading or has been declared in default.

Question 9

Under the FCSC, who is non-eligible?

Answer 9

• Close relatives of directors and managers of the relevant person in default who were themselves excluded.
• Persons who, in the opinion of the FSCS, are responsible for, or have contributed to, the relevant firm’s default.

Question 10

FSCS limit of compensation for:

Insolvency of investment business firm or home finance (mortgage) firm

Answer 10

The compensation limit for investment and mortgage firms is 100% up to £85,000 per person per firm. This is paid, for example, if someone is mis-sold a policy, loses money as a result and the firm no longer exists.

Question 11

FSCS limit of compensation for:

General insurance

Answer 11

The compensation limit is 100% of the claim with no upper limit.

Question 12

FSCS limit of compensation for:

General insurance (non-compulsory insurance such as PMI)

Answer 12

The compensation limit is 90% of the claim with no upper limit.

Question 13

FSCS limit of compensation for:

Long term insurance

Answer 13

The compensation limit is 100% of the claim with no upper limit.

Question 14

Timelines for a complainant to refer their complaint to the FOS

Answer 14

• six months of the date on the firm’s letter advising the claimant of its final decision regarding the complaint;
• six years after the event complained about; or
• three years after the complainant knew, or should have known, that they had cause for complaint.

Question 15

What redress can the FOS award?

Answer 15

A ‘money award’. The maximum monetary award the FOS can require a firm to make to
a complainant is:
– £415,000 for complaints referred to the FOS on or after 1 April 2023 about acts or omissions by firms on or after 1 April 2019; and
– £190,000 for complaints referred to the FOS on or after 1 April 2023 about acts or omissions by firms before 1 April 2019.

A ‘directions award’, telling the firm what actions it needs to take to put things right for its customer. This could include, for example, directing the business to:
– pay an insurance claim that had earlier been rejected;
– calculate and pay redress according to an approach or formula set by the regulator;
and/or
– apologise personally to the customer.

Question 16

How is the FOS funded?

Answer 16

• a general levy paid by all firms; and
• a case fee payable by the firm to which the complaint relates.

Question 17

What areas does the FOS deal with in terms of complaints?

Answer 17

• Long term care insurance.
• Financial and investment advice.
• Life assurance.
• Mortgages.
• General insurance.

Question 18

What complaints can the The Parliamentary and Health Service Ombudsman investigate?

Answer 18

The Parliamentary and Health Service Ombudsman can investigate complaints about hospitals, community health services and other public health organisations in such areas as:

Question 19

What is the The Care Quality Commission (CQC) responsible for?

Answer 19

The Care Quality Commission (CQC) is responsible for regulating adult health and adult social care in England. It covers services provided by the NHS, dental and doctors’ surgeries, care homes, local authorities, and private and voluntary organisations that provide care services. It also covers those detained under the Mental Health Act 1983.

Question 20

What are the main duties of the The Care Quality Commission (CQC)?

Answer 20

registration of health and social care providers to ensure they are meeting essential common quality standards;

To set quality standards for care provision;

Monitoring and inspection of all health and adult social care (e.g. conducting inspections and then posting reports online);

Using enforcement powers, such as fines and public warnings or closures, if standards are not being met.

Question 21

What are the CQC standards five key areas?

Answer 21

1. Are those being cared for safe? In other words, protected from abuse and avoidable harm.
2. Is the care or treatment effective? In other words, the care, treatment or support achieves good outcomes, helps individuals maintain quality of life and is based on the best available evidence.
3. How well is the care provider caring? In other words, the staff treat individuals with compassion, kindness, dignity and respect.
4. Is the care provider responsive to people’s needs? In other words, services are organised so that they meet the needs of those being cared for.
5. Is the care provider well led? In other words, the leadership, management and governance of the organisation make sure that it’s providing high-quality care which is based around individual needs, encourages learning and innovation, and promotes an open and fair culture.

Question 22

What is domiciliary care?

Answer 22

Domiciliary care or non-residential care is part of the community care services which are provided by private firms and/or local authorities. This refers to care provided in the individual’s home, typically where the care required is either more than they can provide for themselves, or than can reasonably be provided by carers such as relatives and friends.

Anyone can ask for their care needs to be assessed and where these meet the eligibility criteria, the local authority is obliged to provide a range of services (or arrange for private or voluntary organisations to provide them) based on the individual’s assessed care needs.

This assistance could include one or more of the following:
* Home help, e.g. taking medication, washing and dressing.
* Meals on wheels.
* Respite care.
* Day care.

Question 23

What is sheltered accommodation or supported living?

Answer 23

Sheltered accommodation provides the ability of the resident to live independently but with the reassurance that help is close at hand in case of emergency.

Accommodation provided by local authorities or voluntary organisations will often have a warden. It is important to note that wardens provide an emergency service only and do not provide care. This is the responsibility of the individual to arrange if required.

Able bodied people may choose this type of accommodation for convenience, sociability or because they have traded-down from a larger property.

Sheltered accommodation is also ideal for individuals with some degree of disability. For people with a requirement for high levels of care, sheltered accommodation would not typically be appropriate

Typically, someone who requires moderate or high levels of ongoing care (such as lifting or medication) will require a care home. Sheltered accommodation is normally regarded as being most suitable for someone with low or medium dependency needs.

Question 24

What is Intermediate care and reablement?

Answer 24

The aim is to promote independence (for example, where someone has suffered a serious illness such as a stroke or heart attack but is allowed home to recover) so that the time spent in hospital is reduced.

This care is provided free by the NHS for patients who need a relatively short burst of intensive medical care. This is usually provided in the individual’s own home but may also be provided in a care home. To qualify, each of the following criteria must be met.

• is aimed at individuals who would otherwise require extended and inappropriate in-patient care;
• is provided as a result of an assessment of needs;
• must have a planned outcome that maximises the individual’s independence (typically to live from home);
• will be time limited – perhaps from two to a maximum of six weeks.

Question 25

What is Respite care?

Answer 25

This describes care provided to someone by the NHS, a charity or local authority, who is normally cared for at home by a relative, neighbour etc. It is provided, for example, if the usual carer is sick or

Question 26

What is a Residential care home?

Answer 26

A residential care home is formally referred to as a ‘care home without nursing care’

They may be run by the council or, more typically, by commercial care providers. They cater either for those people who are able to self-fund their care provision or those with local authority contracts to provide care to individuals. They are likely to provide personal care (not medical assistance requiring the regular intervention of a registered nurse) and accommodation.

Question 27

What is a nursing care home?

Answer 27

If care homes provide nursing or medical care, they are known as ‘nursing homes’ or ‘care homes registered to provide nursing care’.

These nursing care homes are similar in many ways to residential care homes but are distinguishable primarily in that they provide nursing care in addition to personal care and accommodation.

Question 28

What is Elderly mentally infirm (EMI) care?

Answer 28

Care for the elderly for illnesses such as Alzheimer’s and dementia is also referred to as elderly mentally ill/infirm or EMI care. It is a ‘catch-all’ term to describe the care provided to the mentally ill, and examples will also include people with depression and behavioural issues.

Hospitals and care homes may classify facilities as being designated towards EMI care. This reflects the specialist care EMI patients often require from nursing support to other specialists depending on the nature of the care required.