More2life has set out its proposals to the Financial Conduct Authority’s mortgage rules review, saying that later life lending must drop its perception as being viewed as “a product of last resort”.
The equity release lender highlights five areas “where regulatory change is needed.”
Removal of advice silos
The firm says: “The current separation of mainstream and later life mortgage advice under the Mortgage Conduct of Business rulebook means that whether a consumer is shown all their options may depend on what type of adviser they approach. The lender believes this is unacceptable.”
The lender supports merging relevant rules “so every borrower over 55 receives holistic mortgage advice by default”.
Unifying adviser qualifications
The firm points out: “The current requirement for a separate CERER qualification is outdated and reinforces barriers.
The lender says the content in this qualification should be absorbed into CeMAP “so all advisers have a baseline understanding of later life options, while retaining the ability to refer cases where necessary”.
Providing clear regulatory guidance
It adds: “Lifetime mortgages are still sometimes seen as a ‘last resort’, despite significant product evolution.
“The FCA should issue explicit good and poor practice guidance for later life lending, to build confidence, reduce stigma and ensure advisers can engage with these products without fear of regulatory censure.”
Mandating disclosure of options
It says: “Later life borrowers should never reach the end of a mortgage term without being told about later life solutions.”
The firm calls for mandatory disclosure requirements on both lenders and advisers, so customers are always made aware of the choices available to them at key points in their mortgage journey.
Supporting innovation
The firm argues: “Rule changes are needed to allow hybrid and flexible products to reach their target markets, with current silos acting as a brake on development and adoption.”
The lender’s comments follow the FCA closing the consultation period on its wide-ranging paper last Friday.
The regulator’s paper pointed out that around £2.6tn, of the UK’s £9.1tn housing stock, is owned by people over 65.
It added: “If older homeowners are able to access some of this wealth, they may be able to secure a more comfortable retirement.”
The watchdog said it wants to make sure its “rules are not creating a barrier to innovation, and that firms feel confident when launching new offerings”.
UK Finance said earlier this week that it supports later life lending “becoming more mainstream”.
More2life chief executive Dave Harris (pictured) says: “Our experience shows that when customers are made aware of lifetime mortgages, the outcomes are overwhelmingly positive. “Drawdown and interest reward products help people manage borrowing costs and build financial resilience.
“Hybrid models can bridge the gap between mainstream and lifetime mortgages. Downsizing protection and voluntary repayments give people flexibility.
Harris adds: “These solutions are already here. What is missing is the regulatory framework to ensure more people can access them.
“Lifetime mortgages are not a product of last resort. They are helping customers repay debt, stay in their homes, adapt their properties, and support their children and grandchildren.”
