New Government, new opportunity

For the next five weeks or so it is going to be wall-to-wall political coverage as we move towards the 4th July General Election.

It was certainly a surprise to see the Prime Minister, Rishi Sunak, calling something of a ‘snap’ election but it certainly didn’t take long for the political machinery to crank into life and, by the time you read this, the campaigns will have been going for some time and will probably feel longer than the reality.

However, as I write this, the main political parties have yet to publish their manifestos, although of course we’ve started to get a steady drip-feed of a number of policies they are going to contain.

The Conservative Party appear to have been most active in this area, with policies impacting individuals at both ends of their life-cycle, namely mandatory National Service for 18 year-olds and the policy dubbed ‘Triple Lock Plus’ which will create a new personal tax allowance for pensioners designed to ensure they don’t pay income tax on their State Pension.

The latter policy is certainly aimed more towards our later life lending demographic but, as you might expect, there is some significant difference in opinion on just how impactful it will be, and what difference it will make to those people’s lives.

For many, their current or indeed any future appraisal of what they need finance-wise in retirement is not going to be met in full by their pension and other income avenues. Many will need to draw upon the equity they have in their homes in order to achieve their aims, or simply make ends meet.

In that sense we know that whichever party – or indeed parties – form the next Government there are a considerable number of challenges to address, not least in terms of the financial needs of those already in retirement, those who are some way from it, and those who are hurtling towards it. So, that’s just about everybody then.

It will surely not have been missed by any party the increase in financial responsibilities that many in their 50s/60s/70s now have, or the range of ambitions they may want to achieve on behalf of themselves or those closest to them.

This is a well worn list, but it doesn’t change the fact that not only are more people taking mortgage debt into later life that needs to be serviced, they are less likely to be retiring at a ‘normal’ retirement age. In addition they will need to think about an increased cost of living, how their pension income might meet that and future long-term care needs, not forgetting the support they may wish to give their family members, for example, becoming a Bank of Mum & Dad.

In that sense, I was intrigued to hear the thoughts of Chris Pond, Chair of the Lending Standards Board and the Equity Release Council at the recent Equity Release Summit who talked about the need to help engender greater confidence in the later life lending sector from both a political perspective, but also in terms of regulation and standards.

I would agree, but also add the need to ensure widespread Government/industry/regulatory-focused support on signposting advice as well. It will be obvious to us all that consumers should not be travelling any potential later life lending road without accessing professional advice that is able to outline all the possible destinations and routes for them, not just, for example, equity release or remortgaging/product transferring an existing mainstream mortgage product.

We might well argue that political support for later life lending has historically been luke warm but I certainly would argue it has been heating up in recent years. Certainly, from our perspective, we have a Parliamentary estate much more knowledgeable and engaged with the later life lending market, and increasingly aware of its growing importance and what it might be required to do in the future, for far more older homeowners than it has serviced in the past.

Regulatory-wise we now also have the Consumer Duty rules which tie the mainstream mortgage market much closer to a growing number of later life lending options, with a significant shift in terms of advisers knitting all this together on behalf of their clients and being able to present them with all available options across all sectors, whether via the delivery of the advice themselves or via a referral approach.

That combination of growing political and regulatory support should underline the importance of our ‘Comprehensive Conversations’ campaign, helping advisers to work through all available options with clients, and should certainly help develop growth, not just in terms of products and providers, but also in terms of transactions via advisers as they are able to present later life lending options much more in tune with the customer’s wants and needs.

Overall, it’s true that politically at least we are now in something of a holding pattern, but once we have a new Government and a new Parliament is up and running, there will be an opportunity to take on the improved knowledge and greater recent focus on the later life lending market, to champion it, to engender greater confidence in its use, and to highlight how it can help support them in later life and meet their growing wants and needs. Regardless of which party is successful at the ballot box, it’s going to be needed much more in the future – of that there is no doubt.

Paul Glynn is CEO of Air