HSBC mis-sells to 83 year-olds...update

HSBC will look at mis-selling complaints back to 1991...

HSBC has announced that it will consider mis-selling complaints from elderly customers and their families, arising from before its takeover of the scandal-hit advice firm, NHFA, in 2005.

The move opens the way for thousands more claims for compensation.

Three days ago the Financial Services Authority fined HSBC £10.5m for mis-selling investment bonds designed to cover care homes fees.

The bank said then that it was likely to shell out an additional £29m in compensation. Now the bill looks set to grow.

NHFA had 11,000 customers while it was owned by HSBC, of whom 2,485 were possible victims of the poor advice.

Today the bank said it would accept complaints going back to 1991, during which time NHFA dealt with another 9,000 customers.

There is no indication of the extent of mis-selling during that period. Many of the victims are likely to have died, so HSBC will take complaints from surviving family members.

Customers who signed up from April 2004 will receive letters from HSBC and don't need to take any action.

How will I save to pay for care?

Andrew Dilnot is encouraging insurance companies and other firms to come forward with new ways of saving, so that people can prepare to cover the cost of buying care in old age.

He's hoping that by capping the bill for care at £35,000, savers will be more confident that they can build up an effective way of meeting the bill.

In today's report, Dilnot suggests that pensions, Individual Savings Accounts (ISAs) and houses will be the favoured ways of saving, because they all benefit from tax breaks.

And he points to some specific products which could be beefed up by providers.

They include equity release, where a homeowner takes out a new mortgage on his or her property in order to fund some additional income, and critical illness policies from insurers.

He's also interested in making disability-linked annuities available. This would be a form of pension income, designed to increase sharply when the policyholder's needs became acute.

A big question hangs over the proposals, though: will people opt to save more, given that Andrew Dilnot is proposing to make care provision more generous than before?

He admits that few people are interested: they don't understand the care system and don't want to think about the day they'll need the care.

Paying for care - how it might work

Here's Andrew Dilnot's example of how his new system would work:


"Alice lived alone in her own home worth £175,000. She had dementia and needed to go into a residential care home when she was 83 for the last five years of her life.

• Under the current system, she would have to pay for all her care and living costs in full until she died. To cover this she would have to sell her home and would end up spending over £90,000.
• Under our reformed system, Alice would contribute in full to her care and general living costs for two years. At this point she would have reached the £35,000 cap and from then on the state would pay her care costs of £18,500 per year and Alice would just pay for her general living costs out of her pension income. She would keep 80 per cent of her wealth (£140,000)."

What this appears to mean:

*free or partly free care in England for those with savings and property worth less than £100,000 (up from £23,250)

*A cap on what you pay (once you're above that threshold) of £35,000 for care (washing,dressing, moving etc), while you pick up the hotel costs (food and accommodation)

*once you reach the £35,000 cap the care comes free, but you continue pay what you can for the hotel costs out of your income. The contribution would be up to £10,000 a year, or £190 a week, which means that people relying just on the state pension would have to dip into savings.

Caring can be a struggle

Here's a flavour of messages which have come in from carers. Some get the £55 a week Carer's Allowance. Some don't.

Mary

I'm a carer. Gave up my job to look look after my mum, who has alzheimers and dementia and other illnesses, and my dad who has heart problems and my husband who does not keep well either.

Some times I can go days with out sleep if my mum is having a bad time and doesn't want to sleep.

I worked out that I work 168 hours a week for the crap sum of Carer's Allowance of 33p an hour or £55.55 a week, with sometimes only 6 hours off. Even then I'm still on call with my phone in case I'm needed.

We wouldn't take a job for 33p and hour. Whatever happened to a minimum wage for all of us carers?

Johnnie

I care for my Mum of 88 years and have been for nearly 6 years.

I work part time in my local library but do not qualify for Carer's Allowance, as I earn too much . How much do I earn? About £10 per hour.

No free prescriptions for me either. The only benefit that I have had has been from a very kind council grant to purchase a new washing machine for which I am most grateful.

I took this job as it was close to my home but can only work part time because of my caring duties.

No tax credits for me. Little freedom. But I love my Mum, so what can I do?

The government wants us to work but how about some help for those who actually do contribute to our society saving billions for our country?

Let's have some fairness, please.

Joss


I have been a carer for my 16 year old son for all his life.

My husband lost his job in October, so I have gone on income support. But that means I lose my Carer's Allowance.

What right has the government to treat Carer's Allowance as an income?

It's an insult to all us carers. I would like to see the Government get a carer for £55 a week!

Robert

Carer's Allowance stops when you draw a pension. My mother has cared for me all my life, but her allowance was stopped when she got her pension.  

She still cares for me and gets nothing for it.

She was told she could have one or the other.  To rub salt in the wound the DWP send her literature saying 'you could claim' this, knowing full well they will reject her claim.

PS I have changed the names.

Savings cash for children in care

Thousands of children in care will be given cash to put in tax-free savings accounts.

The Chancellor, George Osborne, said the government would spend around £5m a year on the scheme.

"We are going to provide the funding to make this a reality for looked-after children," he told MPs.

It has been suggested that the children could be given up to £250 in their accounts to start with, topped up with £100 a year thereafter, though the Treasury has yet to say how much would come from the taxpayer.

Charities had pointed out that children in care would be left high and dry by the abolition of Labour's Child Trust Funds, which included a contribution from the government for every child.

Contributions to the Coalition's replacement, the Junior ISA, will have to come entirely from family and friends. So children in care would have struggled to take advantage.

Barnardo's has been campaigning for a solution, along with Action for Children.

"This modest investment into savings accounts for looked after children will help these young people achieve their goals and avoid negative outcomes such as homelessness or falling into cycles of debt," said Barnado's chief executive Anne Marie Carrie.

The full details of the new scheme will be worked out with the help of the charities and other concerned groups.

One possibility is that annual payments into the plans could come from charitable trusts.

"We've already contributed nearly £400,000 to Child Trust Funds for children in care, at an average of £300 a year per child," explained Gavin Oldham from the Share Foundation.

"We want to build a voluntary flow of contributions straight though into these accounts," he added.

There are 64,000 children in care, but it is likely that only those entering care would be eligible for the accounts.

Those who have Child Trust Funds from earlier years could receive extra contributions as part of the new scheme.

Smiling in spite of the cuts

Now and then you meet someone who teaches you how to smile through adversity. 74 year-old John Onyettt from Nottingham is one such person.

He is a retired engineer from the local Rolls Royce factory and he has been happily married to his wife, Maggie, for 53 years.

Sadly, Maggie had a stroke, so she can't speak properly, although she does seem to understand the gist of what you say to her.

Maggie needs help getting up and help with dressing, washing and eating. John manages to look after her for most of the time, even though he has had a major heart attack himself.

But they also have visits from council carers. And John has just heard that the cost of these visits will go up from £324 a month to £920, because of council cuts.

In case you don't know how the system works, if you need personal care in your own home, your local authority will do two assessments.

The first is about your level of need: is it low, moderate, substantial or critical? Most authorities will only offer care if you fall into the substantial or critical categories. A handful only cover critical cases, whose lives are in danger.

The second assessment is a means test. If you have less than around £23,000 in savings, the council will cover all or part of your care bill. Above that, you have to pay.

John and Maggie have a little bit more than £23,000. But not for long, because Nottingham Council's charges will wipe out their excess savings within a few months.

But John carries on smiling and joking, while talking about the charges and while helping Maggie make her laborious way across the living room and onto the stair lift.

With a chuckle, he chides her for being, well, a little bit heavy to help along.

He has been looking after her in this way for nearly 10 years.

During that time, they have covered all their major costs themselves: adjustments to the house, wheelchairs, the stair lift.

And there's the rub. John and Maggie took pride in not wasting money, in saving, in paying for what they needed themselves -- if they could.

They were grateful that Nottingham capped their care charges, calculated by the hour, at £81 a week.

Now, in a change which is being repeated across the UK, the hourly rate has been raised and the weekly cap on charges has been removed. It's to help councils deal with multi-million pound cuts imposed on their budgets by central government.

"It's like cutting your jugular vein," John told me, "It'll drain us dry."

But there's still a sparkle and half a smile.

My worry is what Britain does without people like John, who care for our sick and disabled and keep their spirits up. And are careful with the pennies.

Because what they do doesn't make financial sense. Just thinking about money, they should have spent as much as they could when the going was good, leaving the state to pick up the tab later on.

Where would we be then?