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House of Lords Select Committee on Financial Exclusion: Call for Evidence


Response by the Finance Foundation


  1. The Finance Foundation is an independent think tank that aims to encourage informed debate about financial services, explain what the sector does, and suggest ways it could work more effectively – see http://www.thefinancefoundation.org.uk/
  2. We have recently conducted detailed quantitative research on how the over 80s manage day to day financial transactions, which will be published at the end of September 2016 in a report titled: “When I’m 84”. Locking the door on the Older Old – the Challenge Facing Britain’s Banks. It will include a Foreword by Christine Farnish OBE. Opinium Research, who conducted the survey-based element of work, has submitted it for a Market Research Society Award in the category Financial Services Research.
  3. The report identifies those in later old age (aged 80 and over) as a group that is now at high risk of financial exclusion, arguing that we should ‘question the assumption that financial exclusion is primarily about the unbanked or those with very poor financial capabilities. The unique physical and cognitive challenges faced by the older old and their clear requirement for a more traditional way of managing financial transactions now also puts this growing section of the population at risk of financial exclusion as more and more bank branches are being closed down in response to the increased automation of everyday banking tasks’.
  4. We have been working closely with Age UK, the FCA (liaising with the team working on the ageing population strategy) and have had conversations with Professor Russel Griggs to inform the work he is doing at the moment to evaluate how the British Bankers’ Association protocol on branch closures is operating. Griggs’ report is due for publication in October 2016 and is likely to address issues around the risk of financial exclusion among the older old, amongst others.
  5. This submission responds to the questions of who experiences financial exclusion, what causes it and whether it affects different sectors of society in different ways. It also includes the list of recommendations for further action that will be published with our report.  We have included an annex summarising our research methodology and some key findings, in advance of publication of the full report. If you would find it helpful to see the full report sooner, I would be prepared to give early access to this on a confidential basis, if you would like to contact me.


Definitions and Causes of Financial Exclusion


  1. In our report we use one of the conventionally accepted definitions of financial exclusion, namely, the inability, difficulty or reluctance to access mainstream financial services.[1] We argue that the very old, those aged 80 and over, are at particular risk of financial exclusion, and that this is highly significant given that they are the fastest growing section of the population. Currently numbering just over 3 million, this will increase to 3.5 million by 2020 and a staggering 5 million by 2030, of whom 1 million will be over 90.
  2. Unlike other groups, where financial exclusion may be driven by poverty, disadvantage and poor financial capability or indebtedness, the experience of the older old is different.  As a group they are vulnerable to exclusion, whatever their background, for the following reasons:


  • They do not use either internet or smartphone banking. Our research found only 7% of those aged 80 and over are using internet banking (which tallies with Ofcom’s findings that just 11% of those aged 75 plus are doing so).[2] When asked why they don’t use the internet for financial matters, three-quarters of non-users said they did not have the internet, and many also raised hypothetical worries over fraud or making mistakes.
  • Given these levels of digital exclusion, it is no surprise that we also found that older people are highly dependent on cash for daily purposes, such as paying for small amounts of shopping or re-imbursing people who do work/shopping for them. Around half also relied on regular cash withdrawals as their key budgeting tool, using cash as a very simple and tangible method of controlling how much they have to spend.
  • Older people place a very high valuation on face to face contact in carrying out transactions. Nearly all of those in our survey who were not using the internet for financial matters said it was because they wanted to deal with people, not machines. A desire to be able to continue to have access to personal contact via physical bank branches was also their most frequently mentioned priority for the future.
  • Physical and cognitive changes that are experienced as people age make it difficult for them to adapt to and use technology. Many are fearful of technology and worried about privacy, security and fraud as well as finding it difficult and daunting to use. For instance over a third of our sample of people aged 80 and over said they either never used ATMs to take out cash or avoided them if they could. 4 in 10 cited physical issues to do with capacity to use an ATM, perhaps due to sight problems or stiff fingers and a similar proportion were concerned about doing something wrong or being expected to be too quick. Others have documented the problems that complex security screening and passwords present for the older old when using technology, including phone banking.
  • All of these issues make older people far more dependent as a group on the continuation of an effective branch banking network where they can go to get cash, pay bills and conduct other routine banking interactions. They are therefore being disproportionately affected by the continuing contraction of local branches, only partially compensated for by the services offered in Post Offices, which cover some but not all routine banking functions, and which often lack privacy or appropriate facilities.
  • Older people are also more likely, particularly as they become more challenged by physical or cognitive change, including dementia, to become dependent on care and help from others, including informal care from family and friends. This can accentuate the risk of financial exclusion if banks and others are not offering appropriate third party access short of full transfer of control via an LPA. Many older people resort in these circumstances to handing over their debit card and PIN where they are not able to access services themselves, exposing themselves and their carers to a range of risks.


  1. Our report suggests that these issues are likely to become of increasing importance:


  • As life expectancy rises we will in effect have a group of older people who are not just living longer than previous generations, but who are also living for many more years with a limiting illness or disability – current estimates are that men will have around eight and women around ten years of disability at the end of their lives.[3] As a recent Government Office for Science report succinctly puts it, we can expect to see ‘a relative shift away from acute illness towards chronic conditions, multi-morbidities, cognitive impairments and long-term frailty’.[4] Moreover, the number of health conditions an older person is likely to have will increase as they get older: for those aged 80-84 it is most common to have two conditions, by the age of 90-94 – one of the key growth areas demographically – five is most common.[5]
  • All of these challenges mean that the sector cannot rely on younger cohorts migrating to digital banking as they age. The fact that people currently in their 50s and 60s might be adept at using technology for managing their finances, or with a little extra support could become adept, does not necessarily mean that this will continue into later life in all cases. Older people may at a certain point become less capable at these sorts of tasks and potentially more likely to make mistakes. Many of the carers in our study reported that the person they help was becoming confused or unable to focus (32%) and 12% identified anxiety or depression as being a problem, with nearly one-quarter citing these issues as a reason why they got more involved with giving support.
  • Older people are also known to be more vulnerable to scams, fraud or error, particularly online or over the phone, partly because they are deliberately targeted, but also because ageing brings subtle changes in the way information is processed and decisions made. This may actually expose older people to greater risks of serious mistakes or sophisticated fraud when using technology than if they had stuck with conventional transactions methods, based on cash and other more tangible and familiar forms of transfer that they can be more confident and secure in using.
  • Aside from these very important issues around how changes in cognitive functions may affect the ability to use technology safely, many older people, as already discussed, may also have sensory and physical challenges, often combined with illness or frailty. If you are suffering from macular degeneration, are semi-paralysed by a stroke or suffering the side effects of chemotherapy, using self-operated technology – whether ATM, phone or computer – may prove too much of a challenge. And that is before considering whether continued rapid changes in technological interfaces will be something that the older old are able to deal with as cognitive faculties and confidence in doing new things decline.


  1. Our report concludes, therefore, that ‘the confluence of radical change in the banking infrastructure with longer periods of multiple health-related disability at the end of people’s lives, combined with older people’s inclination to seek straightforward, safe and familiar ways of doing things and to maintain social, “non-machine” forms of contact, risks creating a significant tranche of people in the very oldest age groups who will, unless new solutions are found, become financially excluded as they age.’


Government Policy and Regulation




  1. We agree with comments made at the recent Select Committee hearing on the appropriate policy response required to address financial exclusion, including as it affects those in later old age. Leadership within government and the industry is key, as is age-appropriate design of services. Additionally we would argue that, while there are some business, legal and regulatory incentives for firms to act, at a certain point it has to be recognised that the market is unlikely to provide a full solution. Over the medium term protecting access to a viable and safe physical banking infrastructure for all older people, whatever their challenges,  needs to be viewed as a public good: something that the market does not have sufficient incentive to deliver, but that society overall values and supports. Collective funding is therefore needed to overcome the cost barriers and free-rider issues that mitigate against the industry responding voluntarily.
  2. Potential sources of funding might include a dedicated industry levy (with costs potentially passed on, hence becoming a form of cross subsidy to fund the older population’s needs) or support from the charitable or public sector, depending on the nature of the service being provided. Whatever the mechanism, funding would need to be identified and justified on a preventative rationale by considering the greater costs of not providing an effective banking and payments service to this age group. Where people’s capabilities and circumstances in very old age risk excluding them from continuing to carry out daily financial transactions in the future, then just as with other daily functions, they will become fully dependent if they are not enabled to overcome the barriers. From society’s point of view that is by far the more costly option.


  1. Drawing these strands together our report makes the following recommendations for action:


Governance and regulation


Recommendation 1


Champions tasked with embedding age proofing in financial services should be appointed at government, industry and institutional levels to ensure that sustained action to tailor policy development and service delivery to the needs of the older population becomes the norm.  This should be supported by repealing the sector’s exemption from age discrimination legislation.


Recommendation 2


The FCA should be given a stronger role in promoting and supporting age-inclusive products and services, with the potential for a new statutory duty to promote financial inclusion.


Protection/remodelling of a viable physical infrastructure


Recommendation 3


The industry should commit to long-term funding of a national physical banking infrastructure that includes a face-to-face service for all customers who require it, to replace the continuing loss of bank branches. This should either be via the existing Post Office partner banking service or a similarly inclusive solution giving access to the services of their own bank in a convenient local outlet.


Recommendation 4


The industry should be supported to develop innovative ways of providing services to older people in their homes, including a service to deliver cash by post or as an add-on to other home delivery services and, where required, arranging home visits for specific purposes.


Recommendation 5


There should be a national initiative supported by government and the voluntary sector and funded collectively to provide pop-up banking services within existing day facilities for those who, due to mobility, frailty or other issues, cannot use mainstream outlets for everyday tasks and need to have a supported environment with specialist assistance.


Provision for delegation and support to families


Recommendation 6


The industry and regulator should continue to work to develop new and better ways for older people who do not yet want to activate a Lasting Power of Attorney to give some powers to trusted carers to help them manage their affairs without giving up their independence. This should include products that can be tailored to particular needs and reviewed as appropriate.


Recommendation 7


Where carers do need to take greater control the industry should ensure that there are common processes and minimum standards in place to deliver on this, including making sure that staff have the training and expertise to support older people and their carers in identifying options and implementing timely solutions, within a legally supportive set of structures.


Recommendation 8


The industry should continue to work with carers and, where appropriate, other authorities to protect the interests of older consumers where abuse, fraud or declining capabilities are leading to significant risk or detriment.


Age-appropriate design and practice


Recommendation 9


The government and regulator should consider how further innovations in age-friendly design of products, services and technology might be encouraged,and work with the industry and other organisations to develop new ideas, provide safe spaces to innovate and leverage intelligent technology to support older people in staying financially included.


Recommendation 10


As new physical banking services are developed, older people’s need for adapted spaces should be considered and designed for from the start. All staff involved in service delivery should be equipped to support older people by communicating effectively, helping them adapt to changes and identifying areas where they may be at risk or need further advice.



Annex – Further detail on Finance Foundation Research: “When I’m 84”.


Our objectives in conducting this research were:


  • To identify the challenges faced by people aged 80 and over in managing day to day finances and to include the perspective of those who provide informal care and support to them
  • To conduct original research using both qualitative and quantitative methods on the nature and extent of the problems and barriers encountered
  • To make recommendations for industry and policy makers on the changes needed to support the older old, including examining how these needs may change over time.


Much research on older people fails to recognise the specific issues that arise in later old age. Older people tend to be defined as a residual group – just all people over a certain age, often retirement age, but sometimes younger. In addition, data collected about older people often emanate from projects covering a wider span of the population using methodologies such as online or phone surveys which are simply not suited to accessing a broad and representative sample of the older old.


Our research seeks to tackle these problems. In the first instance, we focused specifically on those aged 80 and over, recognising that they may face quite distinct issues from the “younger old” (the 65 to 80 year olds) who are often active, reasonably able-bodied and not yet facing significant challenges. Secondly, the quantitative research that forms the core of the work was carried out face to face. Although more challenging than the now ubiquitous phone and electronic survey techniques, we felt this was the best way to guarantee an inclusive sample of the older old.


Uniquely, we also included evidence from informal carers – family members or friends – who support older people in managing their finances. This enabled us to explore a wide spectrum of experiences among the over 80s from those still independently managing their day to day finances right through to those who, as a result of illness or frailty, rely increasingly on family support.


In summary our research combined:


  • Qualitative discussions with people aged over 80 and with carers to explore the issues
  • Face to face quantitative interviews with 175 people aged 80 and over around the country
  • An online survey of 250 informal carers


Key findings


The very old value the immediacy, familiarity and tangibility of cash


  • Older people are highly dependent on cash for daily purposes and for paying people who do work/shopping for them
  • Cash is also seen as key to budgeting and keeping track for around half of those responding. Nearly two thirds saw no need to use credit cards or were positively opposed to them




They are fearful of technology and worried about privacy, security and fraud, as well as finding it daunting and difficult to use


  • Over a third never used ATMs or avoided them if they could and the majority of those using them only did so inside banks, with only one in five using them in the street.  Older people have a wide variety of concerns about ATMs, from physical useability to worries about privacy, security and fraud.



  • For the 74% who take money out over the counter, worries about privacy when counting money and issues over staff attitudes to elderly people, training and the impact of branch closures were all frequently raised.
  • 87% of the older old never use the internet for any type of financial transaction, and those who do use it are generally doing internet shopping – just 7% use internet banking. Reasons for non-use included not having the internet (75%) and a range of hypothetical worries over fraud, making mistakes and an overriding preference for interacting with people.




Carers get involved as older people become less physically capable, get more confused or experience bereavement


  • Support from carers ranges from routine matters such as going to the bank with them or checking insurance quotes, to more hands on involvement such as checking statements, setting up internet payments or writing cheques. Carers report a wide range of challenges faced by the older old.


  • Carers find it difficult to get support or expert advice from banks in managing their role, encounter barriers to setting up appropriate third party access arrangements, and worry about older people’s vulnerability to fraud, scams and mis-selling.   



[1] McKillop, D. and Wilson, J. (2007) Financial Exclusion. Public Money and Management, 27(1), p. 9.


[2] Ofcom (2015) Internet use and attitudes. Metrics Bulletin, p. 9 and p. 11.


[3] Mortimer, J., and Green, M. (2015) The Health and Care of Older People in England 2015. Age UK, pp. 11-12.


[4] Government Office for Science (2016)Future of an Ageing Population, p.10.


[5] Ibid, p. 16