The recent publication of Discussion Paper (DP) 25/2 by the FCA takes the conversation about where later life lending is heading a significant step forward.
In dedicating an entire chapter to later life lending, the regulator is doing more than asking questions, it is sending a clear signal to the market: lending in later life is no longer niche and it believes it is going to be a huge part of the market in the future, which every stakeholder needs to prepare for.
That is a welcome shift after many years when the regulator itself seemed somewhat suspicious of its role within the market.
Lifetime mortgages have always been a specialist area of the market and not always the desired product for advisers due to the perceived regulatory complexity. Yes, lifetime mortgages are often a last result for older borrowers. However, later life lending is an inclusive area that needs to be considered at all times when talking to customers as they start to mature in their mortgage journeys.
Dave Harris, CEO at more2life, noted in his recent Financial Reporter article here, that the position taken on later life lending has left many to sit out of this market completed.
Even with our later life lending providers and lenders investing in innovation, support and education, there have been some in the advice community - often major players such as other networks and clubs - who have been hesitant to embrace the sector fully. The good news is that this DP is now giving advisers in particular reason – and perhaps requirement - to rethink that.
At The Right Mortgage, we’ve never believed later life lending is something separate to be ignored. We encourage our members to grow and learn about an area we believe is likely to be relevant for their clients. Yes being a specialist lifetime mortgage adviser is very important but advisers should consider the whole of the later life space as an imperative.
We support advisers who are already active in the space, but also those who are newer to it. Those who recognise – as the FCA does in its DP - the growing demand that is already here and is only likely to get bigger in the future as more people require holistic retirement solutions.
Our aim in doing this is to provide the right support, systems and compliance framework to do it confidently. It’s been a core part of our proposition for years, and it’s one of the reasons why Dave rightly singled us out as an example of what good looks like.
So why is DP25/2 such a shift?
For one, it moves beyond treating later life lending as a footnote and instead places it in the broader context of how the UK mortgage market is evolving. The paper acknowledges that, as our population ages and housing wealth remains the most significant asset for many people, borrowing in retirement will become not just more common, but more necessary.
Crucially, the DP also questions whether all advisers should hold one single, mandatory qualification that ensures they can advise in this space. We would say yes and we’ve been encouraging that for some time. But the shift from ‘encouraged’ to ‘required’ would be a seismic one for the industry. If qualifications covering equity release and other later life lending options become mandatory, networks and clubs that have previously chosen to sideline this area will find themselves even further on the back foot.
We’re already seeing movement. More firms are coming to us wanting to engage with later life lending, whether that’s because of changing client demographics, increased demand, or the recognition that retirement planning without any sort of borrowing option(s) is no longer complete. We welcome that. And with the support of The Later Life Lending Network, we’re able to bring firms on board with confidence, knowing they’ll get the training, support and compliance backing they need.
DP25/2 of course is more than just a DP for later life lending; it actually looks like the start of a blueprint for significant change and a full merging of later life and mainstream in order to allow holistic advice across the piece. For advisers, it’s an opportunity, but there should also be a recognition of what is available from distributors in this area because there are very big differences in service proposition.
We have long believed advisers are best placed to support consumers when they’re empowered with knowledge, qualifications and the right framework. We’re proud to be ahead of the curve on later life lending in doing just that.
