"The regulator is causing real problems in the silo approach it takes to markets."
Speaking at today’s National Later Life Adviser Conference, Blackwell discussed the 'disconnect' between the rules around RIO sales and advice compared to the “thorough and comprehensive set of rules” for equity release.
Blackwell said: “The regulator is causing real problems in the silo approach it takes to markets. The RIO situation really brought this home to me, especially given there is the same need for advice and support with RIO as there is with equity release, but it brought a residential approach to the rules [for RIO].”
Blackwell - regarded as one of the chief architects of the Mortgage Market Review (MMR) – said the FCA’s approach to RIO was founded on it being designed to “help the big banks with a problem it had”, namely how it helped customers coming to the end of interest-only mortgage deals. Blackwell said the FCA had been lobbied very hard by those big banks to adopt such an approach.
She argued that this however was “cooking up a problem” in the gap that exists between RIO and equity release products and urged the regulator to “think about this again”. She said: “The regulator needs to have a long, hard look at what this looks like from the consumer’s perspective.”
Blackwell also highlighted the issue of affordability and urged both product providers and advisers to pressure the regulator in terms of the difficulties some older consumers can encounter. “Many older people will have no chance of meeting the affordability requirements in this area,” she said. “The FCA needs to look at this again, and the industry needs to lobby it to help with innovation in this part of the market. It has got halfway there with RIO, but some maneuvering is needed around the income requirements. We probably need to see a capital-based approach to affordability not just income-based.”
