On 1 October, the Government will bring into force certain provisions in the Equality Act 2010 relating to age discrimination. Specifically, these ban service providers from unjustifiably discriminating against customers and consumers on the basis of their age.
Following consultation, the Government confirmed in its response that it will simultaneously bring into force an Order containing exceptions to the overall ban. This Order sets out the circumstances in which service providers can still lawfully treat people differently on account of age. For employers and trustees of pension schemes, one of the most important exceptions is that which will apply to financial service providers who provide products such as annuities. For employers, the provisions applying to immigration, motor and travel insurance may also be relevant.
What is the ban and what exceptions are there?
The ban on age discrimination in the provision of goods, services and facilities is contained in the Equality Act 2010. However, it was one of the parts of the Act that needed to be specifically brought into force by the Government at a date of its choosing. The Government has since confirmed that the ban will come into effect from 1 October 2012.
Certain exceptions to the ban were consulted on and will also apply from that date, including those relating to:
- age-based concessions - e.g. cheaper deals for pensioners or discounts for older members at golf clubs;
- age-restricted sports competitions - e.g. under 21 football leagues;
- age limits in park admission rules for residential park homes;
- certain exceptions relating to immigration;
- allowing specialist holiday providers to provide holidays for people in particular age groups - so 18-30 holidays could be here to stay;
- age verification schemes - e.g. asking for proof of age before selling age-restricted products such as alcohol; and
- the provision of financial services - e.g. insurance companies, banks, credit reference agencies.
The Government has also suggested the use of voluntary schemes in, for example, the motor industry, to ensure that where a consumer cannot be given a product because of their age, they are at least sign-posted elsewhere.
What about services that are not covered by a specific exception?
The normal principles that apply to age discrimination will apply to the provision of any service which is not specifically covered by an exception.
This means that any treatment which is different on the basis of a customer's age and does not fall within an exception will be unlawful unless it can be objectively justified - i.e. unless the provider can show that it is a proportionate means of achieving a legitimate aim. What this means in practice will develop through case law, but employment case law on objective justification is likely to provide useful guidance.
What does the exception for financial services do?
Polarised views on a potential exception for financial services were expressed during the Government consultation. On the one hand, bodies such as Age UK objected on principle to any such exception, while on the other, insurance bodies lobbied hard to ensure an exception was adopted. The Government has decided to proceed as proposed with an exception, although it has redrafted the wording to improve clarity.
The proposed exception is wide, and will allow financial service providers to continue to use age as a factor when assessing risk and deciding on product prices. The Government, based on its previous research into discrimination in the insurance industry, concluded that price broadly reflects risk. It also took the view that legislating to control the use of age banding or age limits would ultimately be detrimental to the consumer. Therefore market practices such as age banding and age limits continue to be permitted.
However, the draft legislation provides that any assessment of risk must, so far as it involves a consideration of age, be carried out by reference to information which is relevant to the assessment of risk. It must also be from a source on which it is reasonable to rely.
Does this exception mean that insurance providers can continue providing their services as before?
Yes, provided that decisions are based on reputable research.
The wide exception for financial service providers will be welcomed by those in the industry since it permits the continuation of standard market practices.
However it is interesting to consider the draft Order in light of the ruling in Association belge des Consommateurs Test-Achats ASBL and Others v Conseil des ministres. In that case an EU Directive permitting differences in individuals' insurance premiums and benefits (subject to gender being a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data) was held to be incompatible with higher ranking EU law. It is questionable whether different treatment on the grounds of age can continue if challenges using the Test-Achats analysis were to prove successful.
The Government stated in its consultation that it was not appropriate to define the terms "reasonable to rely", "relevant" and "risk" which are used in the draft legislation. Instead, it stated that these are ultimately matters for the courts to assess having regard to the facts of each case. The Government said that if further clarification was needed, guidance would be preferable to legislation. This approach could prove problematic. The words "relevant" and "risk" are open to subjective interpretation and it would perhaps have been more helpful for the legislation to have provided clear definitions from the outset, rather than relying on subsequent costly legal proceedings in order to clarify.
Nonetheless, for the time being age will continue to remain an important factor when assessing risk and deciding on pricing in the insurance sector, particularly for products such as annuities.
Do I need to do anything as an employer or as a trustee of a pension scheme?
However, it remains to be seen whether employees or members will challenge insurance providers and/or employers and trustees if they are charged different premiums, or refused a product altogether, on the basis of their age.
In the 2008 employment tribunal case of Swann v GHL Insurance Services UK Limited, the tribunal held that an employer had not, by providing the same general flex-benefit fund to all employees, discriminated against Ms. Swann. This was despite the fact that the private health scheme she could buy using those benefits was more expensive for her to join because of her age. Although the tribunal found in favour of the employer in this case, it was the decision of a tribunal and so is not binding for future decisions.
The Government intends to produce Quick Start Guidance ahead of implementation of the ban. This will include details on what the age discrimination ban covers, the specific exceptions, how it applies in particular areas such as financial services and how "objective justification" works. Further, more detailed, and specific guidance (for example in relation to financial services) will be worked up as necessary in conjunction with partners such as relevant trade associations.
Trustees and employers should monitor the publication of such guidance and any legislative and case law developments in this area.
Finally, the age discrimination ban will be evaluated by 2015 as part of the overall evaluation of the Equality Act 2010 - employers and trustees should keep an eye out for this review and any potential consequences.