"As customer needs continue to evolve, now is the time to rethink the regulatory framework"
From mainstream lenders to later life lending specialists, industry figures have welcomed the regulator’s willingness to confront the challenges facing both new buyers and older borrowers - and to explore reforms that could create a more inclusive, efficient, and future-ready mortgage market.
Marc Baxter, head of products and propositions at Nomo, framed the paper as a significant and necessary step:
“The FCA’s Mortgage Rule Review is a welcome first step in making the UK mortgage market more fit for purpose and supportive of customers’ house buying journeys. The proposed changes to affordability rules, in particular the potential changes to the way in which income and expenditure is assessed and the opportunity to offer more flexible products, could be good news for customers."
Baxter also praised the FCA’s support for innovation through digitisation:
“The proposals around digitisation will also be helpful to customers. As a digital provider of property finance, we strongly believe there’s a role for regulation in encouraging greater digitisation of the property finance process, making it easier and smoother for customers and brokers alike. Purchasing a property can be an extremely stressful process and so banks and the regulator alike should be looking at how we can improve that journey.”
While the discussion paper covers the full breadth of the mortgage market, a significant amount of attention has been given to later life lending - a sector that has grown rapidly in recent years and is expected to play a critical role in how older people fund their retirements.
Jim Boyd, CEO of the Equity Release Council, said the discussion paper recognised a long-overdue reality:
“The discussion paper recognises that mortgage products targeted at older borrowers, whether lifetime, retirement interest-only or other forms of mortgage, are increasingly mainstream. Two in five UK residents are already over 50 years old and in 15 years’ time half of UK households are anticipated to need to use housing wealth to support their spending needs in later life."
Boyd stressed that “enhanced advice” and continued product development will be key to helping consumers navigate later life lending:
“To help people better navigate their financial lives, we need to ensure that people understand their options and have the products and protections in place to make confident choices... The announcement encourages the industry to continue to challenge itself to adapt to support a broader range of customers who have different needs and aspirations.”
James Daley, managing director of Fairer Finance, welcomed the FCA’s recognition of these challenges and called for broader coordination:
“Over half of people are going to need to use their housing wealth to maintain their standard of living in retirement by 2040. But if this is going to be possible, policymakers need to act now... We now need to see a public commitment from Government – as well as agencies such as the Money & Pensions Service – that they will play their part in breaking down the economic and social barriers."
Dave Harris, CEO at later life lender more2life, emphasised that later life lending is no longer niche, and that reforms could empower more advisers and consumers alike:
“It’s hugely encouraging to see later life lending receive its own dedicated chapter... The idea of wider, even mandatory, use of the equity release qualification is a positive one... An enhanced advice model, where more advisers can confidently consider later life lending solutions, will deliver better outcomes for older borrowers."
He added:
“If we’re to empower advisers to take on this broader remit, we must also support them. Advice in this space needs confidence, clarity and capability.”
Echoing this, Jamie Jenkins, policy director at Royal London, pointed to the shifting financial landscape for retirees:
“While it is currently a highly specialised advice activity, this may need to change in future, with many people having insufficient pension savings and turning to the equity in their home to supplement their retirement income.”
From younger buyers seeking smoother digital journeys to older borrowers needing financial flexibility in retirement, the FCA’s wide-ranging review is being seen by many in the industry as an opportunity to rethink entrenched structures and address long-standing barriers.
Pete Maddern of Canada Life summed up the importance of this moment:
“As customer needs continue to evolve, now is the time to rethink the regulatory framework to break down silos and enable truly joined-up, holistic retirement planning.”
