Financial advisers could be falling short of regulatory expectations and endangering customer outcomes by failing to address wills and Lasting Powers of Attorney (LPAs) when recommending later life lending products, according to a warning from Key Later Life Finance.
The equity release advisory firm has highlighted a significant gap in estate planning among older borrowers, noting that nearly a third of over-55s do not have a will, while 77% have not set up an LPA. The firm argues this oversight exposes both clients and advisers to avoidable complications, especially in the case of lifetime mortgages and drawdown facilities.
Without an LPA in place, families are left powerless should a customer lose mental capacity, facing a potentially long and costly legal process via the Court of Protection to gain control over finances. Similarly, the absence of a will means that estates are settled according to intestacy laws, limiting a customer’s ability to determine who benefits from their property — a particular concern when that property secures a later life lending product.
Andrew Parkinson, director of Key Estate Planning, stressed that LPAs and wills are “critical not just for general peace of mind but specifically for protecting customers’ ability to manage their options in terms of any later life lending product they may hold.”
He added: “Modern families are often blended. A will ensures children from previous relationships are protected as are vulnerable dependents and anyone else that customers specifically want to benefit.”
Parkinson urged advisers working in both the mainstream and equity release markets to embed estate planning into the financial advice process, particularly where questions of vulnerability or mental capacity may arise. He said this would not only safeguard the customer’s wishes but also help meet Consumer Duty obligations, reducing the risk of future disputes and helping to preserve family wealth.
Key Estate Planning, which operates as a referral partner for advisers, offers specialist support tailored to the later life market. Its service includes working alongside medical professionals where necessary to assess mental capacity, ensuring a sensitive and robust approach to potential vulnerabilities.
The firm argues that by referring clients to a trusted estate planning partner, advisers can reinforce their value, build deeper client relationships, and ensure appropriate protections are in place for financial products such as lifetime mortgages.
