Chapter 1 - Long term care: the background

Question 1

By 2027, the number of over 85 year-olds is expected to increase by?

Answer 1

60%

Question 2

Both males and females live, on avergae, how much longer than they did 40 years ago?

Answer 2

7 years

Question 3

An estimated 1 in 10 people are paying how much in care costs?

Answer 3

More than £100,000

Question 4

In 2010 - the coalition government set up the Dilnot Commission, to look into the long term funding of social care. How were the findings implemented?

Answer 4

The government accepted many of the recommendations of the Dilnot Commission but, due to the cost decided to implement the changes in two stages, April 2015 and April 2020. Legislation to implement these changes is included within the Care Act 2014. In November 2017, parliament decided not to implement the 2020 changes - this is still being considered and awaiting a green paper.

Question 5

The provision of adult social care is a devolved matter and. What does this mean?

Answer 5

This means that policy on adult social care is likely to diverge between England, Scotland, Wales and Northern Ireland.

Question 6

Who is the regulator for LTCI contracts in the UK?

Answer 6

Under the FSMA 2000 and the Financial Services Act 2012 - the FCA is the sole regulator of most aspects of financial services activity - particularly with regards to conduct (eg. advice given to clients). Dual authorised firms such as banks and insurers are also regulated by the PRA, for matters such as solvency and liquidity.

Question 7

Both types of LTCI products are regulated by the FCA, these are:

Answer 7

• Annuity based LTCI products

and

• Investment based LTCI products

Question 8

What is the FCA definition of LTCI?

Answer 8

Long term care insurance contract, is a contract that provides:

• ….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/she cannot live independently without assistance and that is not expected to change; and
• under which the benefits are capable of being paid for periodically all or part of the period that the policyholderr cannot live without assistance

Where ‘benefits’ are services, accommodation or good necassary or desirable for the continuing care of the policyholder.

Question 9

Plans for the funding of care costs can are known as:

Answer 9

• Pre-funded policies
  
  • Pure protection
    
    • Insurance only product with no investment element
  • Long term care bond
    
    • Lump sum investment plan which includes pre-funded LTC provision
• Immediate need
  
  • Immediate need annuity
    
    • Form of impaired life annuity, which as the name suggests, helps to pay the long term cost of care at point of requirement.
  • Deferred care annuity
    
    • Similar to immediate need annuity in that it pays for care costs (in whole, or in part). Though care need is immediate, people will self-fund for a period of time and so annuity is deferred until agreed future date.

Question 10

The FCA sees LTCI provision as ‘high risk’, this is because of:

Answer 10

• The types of products involved
• Their interaction with social security benefits; and
• the vulnerability of the typical person requiring advice in this area

Question 11

What are the main FCA regulations concerning LTCI?

Answer 11

1. LTCI pure protection contracts are treated as ‘designated investments’. In other words, all TCI should be treated consistently irrespective of product structure.
2. Intermediaries who advise on LTCI are covered by the FOS (dealing with complaints against regulated firms) and the FSCS (dealing with firms in default).
3. Advisers of LTCI are fubject to specific T&C requirements, as are those supervising them. Main requirement is that advisers have or must be working towards an appropriate exam such as CF8.
4. LTCI is subject to pre- and post-sale disclosure requirements.
5. Much of the ICOBS (Insurance Conducs of Business Sourcebook) rules are applied to the handling of LTCI claims.

Question 12

Equity release is not treated as an LTCI product (or regulated as such). However may be used in conjunction with LTC planning.

There are two types of ER product, which are:

Answer 12

• Lifetime mortgages
• Home reversion plans

From a T&C perspective, key points to remember are:

1. to advise on ER, relevant qualification must be held i.e. CII’s RO1 or CF1 and CF6 and ER1.
2. Information that needs to be discolsed by both mortgage providers and those providing advice has to meet FCA requirements set out in the Mortgage Conduct of Business Sourcebook (MCOB) rules.
   
   • For advisers this, will include fact find, and suitability requirements.

Question 13

The regulatory environment of LTCI is covered by:

Answer 13

• the Financial Services Compensation Scheme
• the Financial Ombudsman Service
• the regulation of how health and social care is provided - NHS complaints procedures and the CQC (care quality commission).

Question 14

In order to claim from the FSCS, a claimant must be eligible, most claimants are. Those that are not therefore, include:

Answer 14

• 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 firms default.

These are non-eligible complainants.

Question 15

If the FSCS judges a firm to be in default, it must pay compensation to all claimants affected by the default.

Levels of compensation are:

Answer 15

• Insolvency of investment business firm or home finance (mortgage) firm
  
  • The compensation limit for investment and mortgage firms is 100% up to £85,000 per person per firm.
• General insurance (non-compulsory insurance such as PMI)
  
  • The compensation limit is 90% of the claim with no upper limit.
• Long term insurance (such as life assurance, pensions, annuities and LTCI)
  
  • The compensation is 100% of the claim with no upper limit.

Question 16

FSCS may decide to reduce compensation if:

Answer 16

• there is evidence of contributory negligence by the claimant
• if paying the full amount would provide greater benefit than the claimant might have reasonably expected
• or is greater than the benefit available on similar investments at other firms

The FSCS has a duty to secure continuity of insurance for LTCI policyholders by transfer of the business to another insurer. It must also try to safeguard the policyholders of insurance companies in financial difficulties.

A deceased person can claim via personal representatives; trustees can also claim on behalf of the trust.

Question 17

What is the Financial Obmudsman Service?

Answer 17

It is a free, independent and impartial service that deals with certain disputes between infividual consumers or small businesses and financial organisations.

Membership is compulsory for all authorised firmsm including intermediaries.

Question 18

The full rules and guidance relating to the handling of complaints, and on the operation of the FOS, are contained in:

Answer 18

Dispute Resolution: COmplaints (DISP) sourcebook.

The FCA requires all firms to have a written complaints procedure, THis procudere must include a notificiation to the complainant that they have the right to take this to the FOS if they are not satiifed with the firm;s final answer.

Question 19

The FOS only deals with disputes from eligible complainants. From 1 April 2019, the list of eligible complainants includes:

Answer 19

• Consumer
• Micro-enterprise with fewer than ten employees and a turnover or balance sheet total of no more than 2million euros
• Charity eith annual income of less than £6.5m;
• Trustee of a trust with a net asset value of less than £5m;
• Consumer B2L (CBTL) consumer
• small business with an annual turnover of less than £6.5m and fewer than 50 employees, or a balance sheet total of less than £5m; or
• a guarantor

Before a complainant can take their issue to the FOS they should have exhausted the internal complaints procedures within the organisation or intermediary, and still be dissatisfied with the outcome.

Any legal proceedings must be withdrawn as the FOS will not become embroiled in legal proceedings.

Question 20

The complainant can refer their complaint to the FOS within the earliest of:

Answer 20

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

The FOS canconsider complaints outside these time limits where the cases involve pension transfers and opt-outs for example. It can also review outside time limits if the organisation agrees.

Question 21

Redress for a complaint brought to the FOS can be awarded in two ways:

Answer 21

• A money award, telling the firm what specific sum of money it should pay the customer to cover any fiancial losses they have suffered as a result of the problem they have complained about. The maximum award the FOS can require a firm to pay changed on 1 April 2019, it is now:
  
  • £350,000 plus interest and costs for complaints on or after 1 April 2019
  • £160,000 plus interest and costs for complaints about actions or ommissions by firms that occurred before 1 April 2019, but referred to FOS after this
  • £150,000 (the previous amount) for complaints referred to the FOS after 1 April 2019
• A directions award, telling the firm what actions it needs to take to put things right for the customer.

Question 22

The FOS is funded by:

Answer 22

• General levy paid by all firms
• Case fee payable by the firm to which the complaint relates

Question 23

All parts of the UK are covered by an NHS complaints procedure. This covers medical services provided by the NHS i.e. hospitals and GP services. Complaints about adult care, which is funded or arranged by the LA, are usually dealt with by the LA’s complaints process.

In England, NHS complaints process may follow this approach:

Answer 23

1. Stage 1
   
   • Request a copy of complaints procedure
   • Raise matter with practitioner or their organisation
   • This is a local resolution
   • In the NHS advice and support is provided by PALS or the Patient Advice and Liaison Service
2. Stage 2
   
   • If the patient is unhappy with the outcome, the matter can be referred to the IParliamentary and Health Service Ombudsman, who is completely independent of the NHS and government.

Question 24

If complaint to hospital is unresolved (no local resolution). The complaint must be received by the ombudsman normally within twelve months from the date the individual becamee aware of the events.

The Parliamentary and Health ombudsmancan investigate complaints about hospitals and community health services in areas such as:

Answer 24

• Failure to provide a service complainant is entitled to
• Administrative failures e.g. avoidable delays
• Poor service e.g. failure to explain decisions/ rudeness
• Care provided by NHS staff or staff in care homes if care is funded or arranged by LA

It cannot look into:

• Cases likely to go to court or tribunal
• Properly made NHS decisions
• Service or contractual arrangements outside the NHS/ NHS funded e.g. private care (complaints in this area are covered by the local ombudsman).

Question 25

Where a complaint to the Parliamentary and Health Service Ombudsman is upheld, possible action includes:

Answer 25

• Requiring the body to make an apology
• Getting a decision changed
• Repayment of unneccassary costs by individual or family (not damages or compensation).
• Require body responsible to change processes to avoid repitition.

Question 26

What is the role of the Care Quality Commission?

Answer 26

The Care Quality Commission is responsible for regulating adult health and social care.

It covers services provided in England by the NHS, dental and doctor surgeries, care homes, LAs and private and voluntary organisations that provide care services.

It also cover those detained under the Mental Health Act 1983.

Question 27

The main duties of the CQC are:

Answer 27

• 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
• using enforcement powers such as fines and public warnings or closures if standards are not being met

Question 28

CQC standards are based on five key areas, but tailored for different types of care provision.

The five base standards are:

Answer 28

1. Are those being cared for safe?
2. Is the care or treatment affective?
3. How well is the careprovider caring?
4. Is the care providerr responsive to people’s needs?
5. Is the care provider well led?

If these standards are not met the CQC may:

• use warning notices or requirement notices to set out what improvements must be made and by when
• make changes to a providers registration to limit what they may do
• place a provider in special measures - it is then closely monitored until up to standard within a set timescale
• prosecute where individuals have come to harm, or issues fines to hold care provider to account for less serious failings

Question 29

Most hospitals, care homes and home care agencies have regularly scheduled inspections. All inspections are unnanounced unless there is good reason to do otherwise.

In addition to scheduled inspections, there are two other types:

Answer 29

• Responsive - carried out where concerns are raised over a providers compliance to the standards
• Themed - carried out to review a particular type of service

Question 30

Domiciliary care is one of the main types of care provision and entails:

Answer 30

• Domiciliary care
  
  • This is a lower intensity level of care and is provided to encourage independence and social inclusion.
  • This tends to be provided in the individuals home and is generally focused on social care rather than medical.
  • Provided by LA or private firms. If the LA is funding this, most will charge for this (with a few exceptions)
  • Anyone can ask for their care needs to be assessed (those needing care, or those supporting them).
  • Assitance could include:
    
    • help taking medication
    • meals on wheels
    • day care
    • respite care

Question 31

Sheltered accommodation and supported living, comes in many forms and tends to allow the the resident to live relatively independently - with assistance close to hand in case of emergency.

Sheltered accommodation and supported living can entail:

Answer 31

• Accommodation provided by LAs, voluntary organisations.
  
  • This accommodation may often have a warden.
• Sheltered accommodation is generally chosen by able bodied people for convenience, sociability or because they have traded down from a larger property.
• Someone with a requirement for a high level of care would not generally be suited for sheltered accommodation and would require a care home.
• SA is considered more suitable for someone with low or medium dependency needs.

Question 32

Intermediate care and reablement is provided free by the NHS for patients who need a relatively short burst of intensive medical care.

This is usually provided in the individuals own home,but may also be provided in a care home.

To qualify, the following criteria must be met:

Answer 32

• 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 planned outcome that maximises the individuals independence
• will be time limited - perhaps from two to a max of six weeks

By definition, this represents a high level of dependency.

Question 33

Respite care is provided to someone by the NHS, local authority or charity.

The conditions when this is provided are:

Answer 33

• When an individual is normally cared for at home by a friend, relative or neighour etc.
• Provided if the usual carer is sick, or to give them a break from caring and could be for a night, day or weeks if required.

Respite care will be provided for free by the NHS if it meets the local eligibility criteria. If not the LA can make arrangements, but may charge for it (excluding the cost of any nursing care provided).

Question 34

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

The fatures of a residential care home are:

Answer 34

• May be run by council, or more typically, by commercial care providers.
• They offer services to a wide range of people, from relatively independent residents to those who may have a moderate disability.
• They provide personal care (not medical assistance requireing the regular intervention of a registered nurse) and accommodation.

Residential care homes will be registered by the CQC and will need to meet a number of standards.

Question 35

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

Their features are similar to residential care homes, with distinguihing features as follows:

Answer 35

• They provide nursing care in addition to personal care and accommodation
• Staffing levels tend to be higher than residential care homes and are thus able to deal with individuals who require more support.
• Patients in this type of care are likely to be highly dependent on the care provided by others.

Nursing care homes are also registered by the CQC.

Question 36

EMI or Elderly Mentally Infirm care provides care to elderly individuals with illnesses such as alzheimer’s and dementia. It is a catch all term to describe care provided to the mentally ill.

EMI care has the following features that distinguish it from other forms of care:

Answer 36

• Individuals requireing EMI care tend to require specialist care and nursing support including from other specialists.
• Any one sectioned under the Mental Health Act is likely to be referred into EMI care.
• In terms of dependency, EMI care involves complex and intensive specialist care or supervision.