Mortgage advisers must adapt their business models to address the growing needs of older borrowers or risk being left behind, according to Key Later Life Finance.
The call to action follows the publication of the Financial Conduct Authority’s latest mortgage discussion paper, which places a renewed emphasis on the importance of effective and holistic advice for older borrowers.
The regulator warns that a lack of awareness is preventing many retirees from accessing potentially transformative financial options.
The FCA notes that since 2015, 97% of all new mortgage sales have been advised, which suggests that older borrowers are already in contact with mortgage professionals. However, many remain unaware of the full range of lending solutions available to them.
The paper highlights that 38% of working-age adults are under-saving for retirement, while 22% feel unprepared due to a lack of understanding of their financial options — a situation the FCA says could be improved through more comprehensive advice.
The firm is encouraging mainstream mortgage advisers to consider formal referral relationships with later life lending specialists
Key Later Life Finance argues that advisers are well placed to respond by re-engaging with existing customers and expanding their propositions to better serve aging client bases.
Doing so, it says, would not only improve customer outcomes but also provide a sustainable route to income growth without the costs of new customer acquisition.
The firm is encouraging mainstream mortgage advisers to consider formal referral relationships with later life lending specialists. Such partnerships, it argues, would allow advisers to meet their Consumer Duty obligations while continuing to work within their established advice models.
Will Hale, chief executive of Key Advice, said: “The message from the regulator is loud and clear, mortgage advice must embrace the needs of older borrowers.
“Entrenched silos in the intermediary ecosystem mean that many customers are not being offered access to potentially life-changing later life lending products.
“Products targeted at older borrowers, such as modern lifetime mortgages that include interest-servicing options, are increasingly mainstream and mortgage advisers should be routinely considering them, not only to ensure good outcomes but also to boost their businesses.
“Many mainstream advisers may want to develop their advice propositions to better serve their older customers.
“However, robust triage processes accompanied by referral partnerships with later life lending specialists can be part of the solution for a better functioning market that works in the interests of older borrowers delivering improved outcomes and an environment where advisers and advice businesses can thrive.
“Advisers must engage with the FCA discussion paper and make sure their voices are heard. Trade bodies also have a crucial role to play in representing the views of their members but they must be prepared to compromise and collaborate and be bold in landing a vision for the sector.
“We now have a moment in time opportunity to influence meaningful change and create a market that works effectively for all stakeholders.”
The FCA’s latest discussion paper, CP25/11, underlines the changing demographic realities facing the mortgage industry and calls for a rethink in how advice is delivered.
