Later life borrowers risk being “significantly underserved” under current regulation, according to Charlotte Allen, chief risk and compliance officer at Key Group, responding to the Financial Conduct Authority’s Future of the Mortgage Market Discussion Paper.
In its submission to the consultation, which closed on 19th September, Key highlighted that regulatory silos in mortgage advice “need to evolve” to reflect the benefits of later life lending products and the positive outcomes they can deliver.
Allen said: “The FCA mortgage discussion paper is very welcome but all advisers should be acting now rather than waiting for the FCA to report back. Using housing wealth to support retirement will bring substantial benefits to individual consumers, society and the economy.
“But it must be considered in advance of a consumer reaching retirement age if it is to fully support them in effectively planning for an appropriate standard of living in later life.”
Key is calling for property wealth to be included in Government-backed guidance services such as Pension Wise and Money Helper.
It has also urged regulators to align financial promotion and disclosure rules for regulated mortgages and equity release products aimed at later life borrowers.
It wants amendments to Mortgage Conduct of Business rules to ensure mortgage advice considers all available options for later life customers.
Allen added: “A lack of holistic mortgage advice for later life customers, alongside the absence of property wealth being included in broader financial planning discussions, is holding back consumer access to suitable options, with customer outcomes at risk of being driven by products and adviser types rather than customer need, which discourages innovation in the sector by limiting return on investment.
“These barriers are not reflective of the later life lending products available today which offer a wide range of benefits including the ability to make voluntary repayments and interest rate discounts for committing to repayments.”
Key also proposed mandatory later life lending training for advisers, recommending that the Certificate in Regulated Equity Release should form part of the Certificate in Mortgage Advice and Practice, with compulsory CPD to ensure advisers remain up to date.
It has also called for more flexible disclosure requirements to help firms adapt communications to their target markets.
