Yesterday I talked about the supportive nature of the equity release and later life lending community and the fact that collaboration is one of the real strengths of our specialist sector.
That collaboration is important, because it brings responsibility.
We all have a duty of care – not just to customers, but to the wider advice community.
That means educating brokers, residential lenders, networks, AR and DA firms, introducers, and even occasional later life advisers about the realities of lending for customers over 55 and the options that have emerged in recent years.
And this is where I’m going to say something that may make some residential advisers uncomfortable.
Being able to write a residential mortgage to a customer over the age of 55 with a term that takes then to age 75 or 80 is not evidence that you have fully considered the customer’s later life lending needs.
UNDERSTANDING NEEDS
Over the last year I’ve spoken with more than 100 residential mortgage advisers and IFA’s about lending for customers aged 55+.
What I found was not a lack of good intentions. It was a significant knowledge gap.
Very few were familiar with PTLM type solutions; Interest Reward products; zero ERC structures and flexible voluntary payment options available from lenders such as Aviva.
Even more concerning, a number of advisers already had referral relationships with later life specialists, yet had little understanding of the products those firms could offer.
That raises another important point.
“A referral partnership is not a substitute for careful research.”
A referral partnership is not a substitute for careful research. If a residential adviser is referring a customer to an equity release or later life lending firm, they should take the time to research the business carefully and satisfy themselves that the firm is appropriate for their clients.
That might include considering the firm’s regulatory permissions and status; the experience and qualifications of the advisers; the range of later life products they are able to advise on and whether their advice process appears to consider alternatives and suitability, rather than simply facilitating a transaction.
ONGOING UNDERSTANDING
Simply having a referral arrangement in place does not automatically mean that the adviser fully understands how that firm operates, what products it can advise on, or whether its approach is aligned with the needs of the customers being referred.
Given the pace of product development in the later life lending market, I believe it is important that advisers who choose to refer customers into this space carry out their research thoughtfully and maintain an ongoing understanding of the specialist firms they work with, rather than viewing the referral as a one-off administrative solution.
What has surprised me even more over the last few months is that the issue is not limited to pure residential mortgage advisers.
WIDER ISSUES
I’m increasingly seeing IFA firms and mortgage brokerages that write small volumes of equity release business who are not fully familiar with many of the newer products launched over the last few years that have already been mentioned.
These are still unknown to a surprising number of firms that are actively transacting in the later life space.
One area that I think deserves more discussion is the position of advisers who are appointed representatives of networks.
In many cases, networks require advisers to write a minimum number of equity release cases each year, or sometimes each quarter, in order to maintain their internal Equity Release permissions or licence status.
That is understandable. The intention is clearly to ensure that advisers remain active in the market rather than holding permissions they never use.
UNCOMFORTABLE QUESTIONS
But I think we need to ask an uncomfortable question: Is a minimum case volume really enough on its own to demonstrate ongoing competence in a market that is evolving so quickly?
Writing a small number of cases each year does not necessarily guarantee that an adviser remains up to date with new product structures; changing lender criteria; voluntary payment innovations; Interest Reward-style propositions; ERC developments or the wider regulatory expectations around later life customer outcomes.
So, should networks be doing more?
For example, should advisers who hold internal equity release permissions also be expected to complete specific annual CPD focused on later life lending; periodic knowledge assessments or refresher testing; product and criteria update training or some other form of ongoing competence validation designed specifically for advisers who write relatively low volumes of business?
I’m not suggesting that occasional equity release advisers are incapable of giving good advice. Many are highly experienced professionals who approach these cases with great care.
PACE SETTERS
The question is whether the current framework for maintaining permissions is keeping pace with the increasing complexity of the later life lending market.
If we genuinely believe that later life lending is a specialist area requiring ongoing education and competence maintenance, then I think it is reasonable to ask whether minimum case numbers alone are a sufficient safeguard for customers, or whether the industry should be exploring additional ways to ensure advisers’ knowledge remains current and robust.
Ultimately, this is not about creating unnecessary barriers for advisers. It is about asking what more can be done to reduce the risk of outdated knowledge leading to suboptimal customer outcomes in a market where product innovation has accelerated significantly over the last few years.
RISK MEASUREMENT
That leads me to a question that I think the industry needs to take seriously: How are lenders, regulators, networks, and governing bodies measuring the risk created by advisers who write occasional equity release business but are not keeping pace with product development?
Under Consumer Duty, firms are expected to deliver good outcomes; avoid foreseeable harm and ensure that their advice process remains appropriate for the customer’s needs and characteristics.
If an adviser is recommending later life lending while being unaware of product developments that could materially affect affordability; borrowing capacity; repayment flexibility; ERC exposure or the customer’s long-term financial resilience then is that simply a training issue, or is it a potential foreseeable harm issue that the industry has not yet fully acknowledged?
This is not a criticism of individual advisers trying to do the right thing.
It is a challenge to an industry process that too often treats later life lending as a niche add-on rather than a specialist area requiring ongoing education and competence maintenance.
KNOWLEDGE FRAMEWORK
The uncomfortable truth is this.
Many advisers – including some who do write equity release business – are approaching over-55 customers using a knowledge framework that has not evolved at the same pace as the later life lending market itself.
That matters because Consumer Duty is not about whether a mortgage can be made to fit. It is about whether the customer has received a process designed to deliver a good outcome and avoid foreseeable harm.
If a customer in their late 50s, 60s, or 70s could potentially benefit from a RIO, equity release, Interest Reward or another later life solution, should those options at least be actively considered and discussed, even if the final recommendation remains a standard residential mortgage?
This is not just the responsibility of brokers.
Lenders need to improve how product innovation is communicated.
Networks need to ensure later life lending is embedded into adviser education, not treated as a niche afterthought.
Specialist ER firms need to maintain ongoing education with their referral partners rather than assuming a referral agreement equals understanding.
All of us need to challenge complacency when we see it.
We often talk about collaboration in the later life sector. The real test of that collaboration is whether we are willing to have honest and uncomfortable conversations about the knowledge gaps that still exist across the advice chain.
So, I’d be interested in the views of residential brokers, IFAs, later life advisers, lenders, networks, and compliance professionals.
Should firms advising customers aged 55+ – even those writing only occasional equity release business – be expected to maintain ongoing awareness of evolving later life lending products in order to support good customer outcomes and minimise the risk of foreseeable harm under Consumer Duty?
YESTERDAY, TODAY AND TOMORROW
So far we’ve looked at the market and we’ve looked at the knowledge gap.
But there is another part of the equation that we need to talk about.
What happens when the right solution is identified but underwriting and criteria get in the way?
Tomorrow, I’ll be looking at risk, underwriting and proportionality – and asking whether, as an industry, we sometimes say “no” to the wrong risks.
I’ll be sharing some real examples and challenging whether there is more we can do to achieve better customer outcomes without compromising responsible lending.
This one may be uncomfortable. And that’s exactly why I think we need to have the conversation.
