Bob's Blog

Later life market still needs work to be fit for purpose

22 Nov 2019

There is a lot of talk about the later life lending market at the moment and how it is likely to be a significant growth sector for advisers in the years ahead.

I don’t deny this at all and it seems like a common-sense prediction, based on the growing importance of most people’s central asset, their home, in their future financial wellbeing. 

We are certainly reaching a point for many people where, without that asset, they are looking at a very different later life or retirement living experience.

And it makes perfect sense for our industry to provide ways and means to ensure they can utilise their asset or equity to help fund those later life years.

However, there is a nagging doubt I have around whether what we have, and what we are able to present, is totally fit for purpose?

Product distinction and advice pathways

It is all well and good having a bigger, and growing, range of potential product options for later life customers, but that is only worthwhile if there is a distinction between those products.

We also need to ensure we have the correct pathways to advice in place.

I noticed that some of the feedback from Mortgage Solutions’ Supper Club last month focused on this area with concerns raised by attendees around the marketing message to potential clients, but also whether there were too many similar products and whether a refresh might be in order in some areas. 

It’s perhaps understandable that there might be a sense of frustration from advisers if they feel providers are coming to market with ‘me too’ propositions rather than something that is genuinely unique and relevant for different types of customers. 

Indeed, while the sector has clearly kicked on in terms of activity, might we wonder whether – in order to truly push into the mainstream – we need a provider community willing to push the pace of progress and push the product envelope a bit more? 

Or maybe a new disruptor will make their mark and in turn shift the entire sector?

Regulation not the issue

There is also some disquiet about the current regulatory situation when it comes to the different later life lending product types, and who is, and is not, able to advise upon them. 

It has been well-documented that a large number of stakeholders believe the siloed nature of mainstream mortgages with a higher maximum age, retirement interest-only products and equity release, means the likelihood of customers getting full holistic advice in this area is limited. 

Plus, there also appears to be a reluctance from some networks to allow their appointed representatives to be active in the later life space, which might compound the problem.

However, I am unconvinced that the regulatory situation is having a hugely detrimental impact on consumers, or that advisers are somehow shirking their advisory responsibilities in this area by only offering the product they are authorised to, rather than finding a pathway that leads the customer to the right product. 

In fact, Paradigm’s dealings with the regulator recently, particularly on later life lending, have been very positive. 

Focus from FCA

We think there’s a genuine push and focus from the Financial Conduct Authority (FCA) on getting things right in this area, particularly when it comes to older, potentially more vulnerable, customers who will clearly benefit considerably from taking advice. 

There is also industry-based movement being pursued which should help in this area anyway.

The recently announced change to the CeRER qualification is one of these, as is the greater focus on adviser and customer education on what can be achieve in the later life sector. 

More can always be done of course – we need to get better at signposting customers to advice, and clearly there is scope for providers to review their product offerings and understand where there could be gaps for different types of borrowers. 

Overall, however, it’s positive to see progress being made, and later life advice should be a key area for all practitioners in the years to come, as long as you take it seriously.

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