Time moves on. The dashing hero is in a home. Unable to get out of his bed without assistance, he finds himself in a ward of people mostly worse off than he is and a few who don’t know where they are or what day it is. If he has been careful with his money he may be able to afford to pay for his own care costing up to £50,000 a year in London and maybe £20,000 + in the provinces. If it has all gone, his local council should be paying for it. If his assets fall between the upper (say, £23,000) and lower (say, £12,500) notional capital limits, a tariff income test is applied. Each £250 of capital is assumed to earn £1 a week. With 52 weeks in a year, £52 income from a lump of £250 equates to 20.8 per cent a year – slightly more than anything offered by the Government’s own National Savings http://www.nsandi.com/ Were a private company to try this sort of policy, it would probably end up featured on a special programme on Despatches, Panorama or consumer programme.

A similar test is applied in applications for Pension Credit http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG_10018692 where the same weekly return is applied on each £500 lump of savings.

But care is in the news again with the recent Care Quality Commission http://www.cqc.org.uk/ report suggesting that there should be a fitness and propriety test for owners of the UK’s 24,000 residential care homes or in other words, a licence to care. Fitness & propriety are not words which roll easily off the tongue, but are very relevant to the world of financial advice.  A fitness & propriety test is part of the authorisation process for financial advisers  http://www.fsa.gov.uk/Pages/Doing/Regulated/Approved/persons/fitness/index.shtml where the question is “Is this person the sort of chap we want giving financial advice?” For a summary of this report see  http://www.telegraph.co.uk/health/elderhealth/6720669/What-will-it-take-to-sort-out-our-care-homes.html

Understandably, some care home owners are rather fed up and some go out of business every week partly due to some local councils refusing to pay the full rate. In a home of say, 30 beds, carrying one person that is doing it “on the cheap” may be viable but with a couple of underpaying council people, the financial viability of the whole business is at risk. Sometimes the home closes, so granny has to be moved to a home miles way or one that is not so comfortable. If you think care homes are expensive, compare their cost to that of a local hotel. Chances are that the cost will then seem more reasonable, but everyone has limits to what they will or can pay.

Proving that the path to hell is paved with good intentions red tape prevents simple outings that would make all the difference to someone stuck in the same room or lounge all day. In the same vein, our policemen only spend an average of 6 hours a week out of the office, spending the rest of the time catching up on paperwork. Even better, the recent environmental regulation on CO2 emission for lorries has put people out of work. A client with a fleet of lorries had to replace them when the new regulations came in just over a year ago. New lorries are more expensive, so the business can only afford nine lorries instead of the previous ten, and one chap gets his P45.

Plus there are some things which regulations don’t cover, as a previous home owner client told me years ago. Against stiff local opposition from Equitable Life, I set up my first SSAS as well as arranging a huge amount of life cover for the borrowings. Visiting his new home was very pleasant with a warm welcoming atmosphere. Still remember seeing a new piano in the bright lounge where the residents were chatting happily. Sharp contrast to other ones I had visited where a smell of boiled cabbage is the main memory.

Anyway, client has opened his new home with plans for others, having originally arrived in this country with no money and training as a chemist. Regulations for homes are heavy and involve working closely with local councils. Plans for opening the second home are well advanced, and my client gets a phone call from Head of Social Services hinting that the job as manager of this new home should go to his wife?? Client declines this offer and once the home is open, the council march in and close it down on the grounds that there has been a breach of various regulations. Lender panics and calls in the receivers to run the home. Unsurprisingly, they don’t run the home as well the owner and everything goes downhill. A tribunal is called eventually, but its chairman dies shortly after proceedings start. Everything has to be done again and it restarts a year later. Eventually, the verdict is that the Council abused its powers but by this time the corrupt official in question has been quietly pensioned off and the council has spent over £250,000 on legal fees. In the meantime, client’s wife has had a nervous breakdown, is on anti-depressants and is down to six stone in weight.

Last news was that client was still fighting for compensation with assistance from Federation of Small Businesses http://www.fsb.org.uk/default.aspx?loc=general&id=0 Hope he receives my Christmas card.