The FCA’s proposed targeted support regime risks missing a significant opportunity to improve outcomes for older homeowners by excluding later life lending options, according to Key Partnerships.

The referral arm of Key Group said the initiative represents a “once in a generation change” that could help close the UK’s advice gap by bridging the divide between generic guidance and personalised advice. However, it argued that the current scope does not sufficiently consider the needs of over-55 borrowers.

Key Partnerships pointed to the scale of housing wealth held by older homeowners, with more than £3.7 trillion of mortgage-free property wealth across this demographic. It said this should form a core part of later life financial planning, particularly where individuals have limited savings or investments.

Despite this, consumer awareness of later life lending remains low, placing greater emphasis on advisers to ensure clients are directed towards appropriate expertise.

The firm is calling on businesses developing targeted support propositions to include clear signposting to specialist advisers, who can assess whether products such as modern lifetime mortgages are suitable.

It added that stronger collaboration between mainstream mortgage advisers, wealth managers and later life specialists would help broaden understanding of available solutions and improve referral pathways.

Damon O’Connell, director at Key Partnerships, said: “In order to ensure good outcomes for customers, the home has to be included in retirement planning conversations, but the scope of Targeted Support does not currently include later life lending options.

“However, firms that offer Targeted Support propositions should signpost customers to specialist advisers who can assess whether products such as modern lifetime mortgages can be used as part of retirement planning conversations.

“Later life lending products are increasingly relevant to all over-55s homeowners and can support needs such as more efficient management of existing debt, a boost to retirement income, home improvements to potentially make a property more suitable for later life living and eventually to perhaps help finance care provision in the home.”

The FCA has opened applications for targeted support permissions, with firms able to apply via Connect. Banks, pension providers and other authorised firms will be able to offer suggestions to groups of customers with shared characteristics, marking a shift towards more tailored but non-advised support.

Key Partnerships believes the framework could become a key route for engaging more customers with later life lending, provided it incorporates clearer pathways into specialist advice.