Nikhil Rathi, chief executive of the FCA, recently gave a clear indication that the regulator now views equity release as a mainstream option for supporting Britain’s ageing population – rather than merely a product of last resort.
In a wide-ranging interview on the Fairer Finance podcast, Rathi described the growing retirement funding gap in pretty stark terms. Defined benefit pensions continue to disappear (in the private sector, at least), while defined contribution schemes frequently fall short of providing adequate income.
He pointed out many future retirees will hold around 80% of their wealth in their home and pension combined. “The pension is unlikely to be sufficient to give them, even with the state pension, the kind of living standards they want in retirement,” he said. “That’s before you get to the questions of how social care is paid for and other pressures.”
Later life lending, including equity release, needs to be “opened up thoughtfully and carefully with appropriate guardrails”. He cited analysis showing more than half of people in retirement will need to draw on housing wealth to sustain their expected lifestyle.
He also supported efforts to remove artificial barriers between standard mortgage advice and equity release advice, allowing consumers to explore all options during a single discussion.
ATTITUDE CHANGE
This marks a significant shift in attitude. Although modern equity release is a transformed flexible product, the reputational overhang from 80s mis-selling scandals sadly still persisted. For years, the FCA concentrated on strengthening standards, raising advice quality and safeguarding vulnerable customers.
Now the tone is different: society has changed, longevity has increased and equity release is formally regulated (the Financial Ombudsman Service’s complaints data for FY 2025 shows only 9 published complaints were upheld or partially upheld.
Although we are not complacent, the level of complaint is small by any measure) – and the maths of retirement don’t add up without releasing property equity.
Many consumers receive guidance from pension or wealth advisers who face no requirement to factor in housing wealth when assessing suitability. As the FCA examines ways to encourage growth in the later life lending market, any measures must ensure advisers in all areas recognise their obligations under the Consumer Duty.
EQUITY RELEASE RAMIFICATIONS
For the equity release industry, Rathi’s remarks are a call to action. Providers and advisers have long maintained the division between mortgage and lifetime mortgage expertise restricts access to suitable products. The FCA appears to be taking notice.
While Rathi stressed the importance of guardrails to maintain advice standards and product fairness, the practical consequences point towards quicker development of combined advice models and more flexible, innovative offerings.
Irrespective of the evolution of the FCA’s policy in this area – which will form a key part of 2026 with an interim statement outlining how the regulator will seek to grow the later life lending sector, expected at the end of the year – the broader mortgage sector can work to get ahead of regulation by developing best practice covering better education and CPD for advisers, better referral and collaboration models and developing a practical road map to help consumers’ navigate later life funding from drafting powers of attorney at the start to funding care needs.
The Council, in collaboration with major trade bodies, looks forward to working to deliver this best practice.
Rathi has set out a direct challenge: the UK requires later life lending to function effectively. Barriers in the form of lower awareness, competition, funding and innovation still exist, alongside concerns about advice silos and the limited flexibility of products.
By addressing these issues head-on, the sector can build on existing strengths – such as Council standards ensuring customers are protected from negative equity, for instance.
The focus must remain on consumer outcomes, with advisers considering the full range of options including downsizing, pension drawdown and standard later-life mortgages.
This approach will help ensure later life lending becomes a reliable part of balanced retirement strategies.
Success will depend on sustained commitment to high standards, transparent processes and genuine collaboration. The goal is to enable consumers to access housing wealth safely and confidently with the right guidance and advice, when it suits their circumstances.
With the right actions now, the sector can meet Rathi’s challenge and play a central role in securing better retirement outcomes across the country.
