"With advice regimes segmented due to different regulatory conduct rules and permissions, different types of adviser; and different product heritage, CML has long called for a smoother experience"
It believes the current framework for delivering guidance and advice operates largely in two distinct silos - lenders and intermediaries who lend and provide advice on residential mortgages, and those who lend and advise on equity release products (mainly lifetime mortgages).
Its report argues the two markets have "very different attitudes" towards borrowing in later life.
The CML says: "Residential mortgage lenders have traditionally viewed borrowing as a means to accumulate equity and a retirement free of debt. The lifetime mortgage lenders see borrowing in later life as a means to help customers extract value from the accumulated equity.
"Advising older borrowers can be time-consuming and expensive. Borrowers who may need to move between the two markets or who may wish to weigh up the advantages and disadvantages of each market find there is no single obvious place to go and no joined up framework for addressing their needs. This needs addressing, with government best placed to facilitate."
In addition, the report suggests consumers can be "frustrated at barriers to borrowing" and perceive that the products available do not fully meet their needs and can be difficult to compare and understand.
The CML says guidance services and the wider industry should develop better tools to help compare and evaluate later life borrowing options and encourage and facilitate an expansion of advice services by advisers to include both residential and lifetime mortgages.
It also says lenders, advisers and the FCA should consider how best to deliver a more joined up approach to advising later life borrowers.
The CML believes regulators and residential mortgage lenders should also further explore how they judge affordability in retirement, taking account of income from investments, savings, DC pensions and state benefits.
Finally, the Council says lifetime mortgage lenders should "continue to build more flexibility into lifetime mortgage products" to allow partial or full early repayment of interest and capital with lower costs for doing so.
June Deasy, head of policy, CML, said: "Older people have to make complex, often inter-related decisions about a range of financial services products, from pensions, wealth management and mainstream mortgages, to equity release. More flexible ways to borrow and use housing equity throughout life will play an increasingly key role in how these decisions are made.
"With advice regimes segmented due to different regulatory conduct rules and permissions, different types of adviser; and different product heritage, CML has long called for a smoother experience for consumers. The research shows that consumers can see a disconnect between their need and the service provided, and a desire for clearer signposting to their options. CML believes that government is best placed to facilitate this signposting role, as it develops its Single Financial Guidance Body."
Nigel Waterson, Chairman of the Equity Release Council, commented: “We agree with the CML that the mainstream mortgage and equity release markets should strive to work more closely. In doing so, the best possible outcomes can be delivered for consumers and we are always open to the opportunity to work with other industry bodies and regulators to achieve this goal. We hope that by working collaboratively, we can make further progress in joining the dots between equity release, residential mortgage, and pensions.
“Every consumer has different needs, and it is vital that advisers possess a comprehensive knowledge of a range of potential solutions, including those available via the wider mortgage market. We fundamentally support any initiatives to drive greater volumes of referrals between specialists, especially where customers’ needs can’t be met within an organisation."
