Advice to older borrowers needs reconsidering

Jessica Nangle

June 26, 2017

It is vital to adapt a more joined up approach to delivering advice to older borrowers, according to research from the Council of Mortgage Lenders (CML) and the Building Societies Association.

The report suggests that residential mortgage lenders have traditionally viewed borrowing as a means to accumulate equity and a retirement free of debt whereas the lifetime mortgage lenders see borrowing in later life as a means to help customers extract value from the accumulated equity.

Recommendations put forward by the report include the new single public financial guidance body (SFGB) coming into effect from August 2018, should explore ways of increasing the provision of and signposting to fuller information sources available to older consumers.

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Another recommendation suggests FCA and industry collaboration to better understand the economics of delivering advice to older borrowers.

This comes as 46% of all households are said to be headed by individuals 55 and over, holding £2.5tr of property wealth.

Lending to older borrowers also grew in 2016 and was driven by remortgages and lifetime mortgages,

June Deasy, head of policy at CML, said: “Older people have to make complex, often inter-related decisions about a range of financial services products, from pensions, wealth management and mainstream mortgages, to equity release.

“The research shows that consumers can see a disconnect between their need and the service provided, and a desire for clearer signposting to their options.

“CML remains committed to working with the industry, regulators and consumers themselves to address the associated challenges and opportunities of later life lending.”

Jackie Wells, independent policy & strategy consultant and lead researcher of the report, added: “There are many indicators that demand for borrowing in later life is growing, in particular as a form of financing retirement.

“However, this project has revealed that consumers struggle to navigate the market and those lenders and advisers generally operate in silos that prevent consumers comparing across the whole market.”

Nigel Waterson, chairman of the Equity Release Council, concluded: “We agree with the CML that the mainstream mortgage and equity release markets should strive to work more closely.

“In doing so, the best possible outcomes can be delivered for consumers and we are always open to the opportunity to work with other industry bodies and regulators to achieve this goal.

“We hope that by working collaboratively, we can make further progress in joining the dots between equity release, residential mortgage, and pensions.”

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