The FCA has made the case for holistic mortgage advice

Last Thursday, the head of the FCA stood up at the JP Morgan Pensions and Savings Symposium and dropped a line that deserves more attention than it got.

“If we continue to treat pensions, mortgages and savings as separate tracks, we will miss opportunities to help consumers get where they need to be.”

Read that again. Nikhil Rathi, the person who sets the regulatory weather for every financial services firm in the country, is saying out loud what many of us have thought for years: the way we carve up financial advice into neat little boxes is failing the people we are supposed to help.

WHAT RATHI ACTUALLY SAID

The speech, titled “How Technology is Changing the Pensions Conversation”, covered a lot of ground. Pensions dashboards, AI, simplified advice rules, even the idea of using pension pots for house deposits (as already happens in Australia, New Zealand, the US, Singapore and South Africa).

But the section that should be circled in red by anyone in the mortgage industry is his commentary on later life lending.

Rathi pointed out that for most households, around 80% of their wealth at retirement sits in two places: pensions and housing.

For homeowners, choices around downsizing, equity release, or later life borrowing interact directly with how pension savings are used. He described retirement as “a balance sheet issue” rather than simply a pensions one, involving total wealth management across pensions, housing, and other savings.

He went further, noting that as mortgage terms extend into later life and pensions savings gaps persist, housing wealth will play a larger role in supporting retirement living standards. Products like lifetime mortgages and retirement interest-only mortgages, currently more niche, may become more prominent parts of the retirement landscape.

The FCA, he said, will be exploring how consumers might be better supported to access more holistic advice and guidance on later life lending.

RISK: THE BIT MOST PEOPLE WILL MISS

Buried in the speech was a section on risk that is worth pulling out separately, because it tells you a lot about where the FCA’s head is at right now.

Rathi used the mortgage market as his example. He talked about how large groups of consumers were being left underserved because affordability assessments were being applied too restrictively.

Creditworthy borrowers shut out, stuck paying high rents, more financially vulnerable now and into the future. So the FCA clarified the flexibility already available under existing rules, and 85% of lenders updated their approach.

The result: many borrowers can now access around £30,000 more, and the share of purchases by first-time buyers has risen sharply.

His takeaway was pointed: “Too often discussion focuses only on the risks of doing something, rather than weighing the risks of doing nothing.”

And on consumer protection more broadly: “Consumer protection will always be central to our approach. But protection doesn’t mean insulating people from every decision.”

He described the FCA’s goal as a “risk-aware” system rather than a “risk-free” one, and talked about managing risk “with” consumers, not “for” them.

That is a meaningful shift in tone from the regulator, and it is worth paying attention to.

WHY THIS SHOULD MATTER TO YOU

Here is the thing. The mortgage industry and the pensions industry have been running on parallel tracks for as long as most of us can remember.

A client approaching retirement speaks to their pension adviser about drawdown options, and then separately, almost as an afterthought, wonders whether equity release or a retirement interest-only mortgage might help. Those two conversations rarely happen in the same room. They almost never happen with the same adviser.

“Rathi is saying that needs to change. And honestly, he is right.”

A report from the Social Market Foundation released the same week suggests 54% of Gen X will have inadequate retirement incomes, with half overestimating what they will actually receive.

The Equity Release Council estimates that 39% of current renters believe they will still be renting in retirement. Standard Life suggests renters may need up to £400,000 more in savings to fund their retirement compared to homeowners.

And for those who do own their home, the equity sitting in bricks and mortar is often their single largest asset, yet it remains largely untapped when it comes to retirement planning.

These are not abstract statistics. These are the people sitting in your office, or your client’s office, right now.

THE LATER LIFE LENDING OPPORTUNITY

Think about what this means in practice. If a client’s retirement plan involves their pension, their property, and their savings, the adviser who can see across all three is in a fundamentally different position to one who can only see a single piece of the puzzle.

And later life lending is broader than most people realise. It is not just equity release. It covers lifetime mortgages, retirement interest-only mortgages, downsizing advice, and increasingly, hybrid strategies that blend property wealth with pension drawdown.

The clients who need this kind of advice tend to be asset-rich, relationship-driven, and looking for someone they trust to help them through decisions that touch housing, inheritance, and long-term care all at once.

If you are not already equipped to advise on later life lending alongside conventional mortgages, it is worth paying attention. The FCA is telling us the market is moving in that direction.

The firms that get themselves into position now will be the ones clients turn to when the pensions dashboard goes live and millions of people see, for the first time, what their retirement finances actually look like.

TECHNOLOGY AS THE ENABLER

Rathi was clear that technology is what makes this shift possible. The pensions dashboard will let consumers see all their retirement savings in one place for the first time. And once people can see the full picture, they are going to start asking obvious questions: “Is this enough? What else have I got? What about my house?”

Research from Lloyds Banking Group suggests over half of UK adults are already turning to AI to help manage their finances, with about 40% using it for future financial planning including pensions.

Rathi pointed to simplified advice rules, AI-driven tools, and the FCA’s own Innovation Sandboxes as ways for firms to deliver more joined-up guidance without tripping over regulatory boundaries.

Consumer Duty, he noted, supports firms that genuinely help customers achieve good outcomes, and that includes being willing to have broader conversations about wealth rather than sticking rigidly to the product you happen to sell.

His message to firms was direct: “I’d encourage making use of all the FCA support available; our Innovation Pathways, Sandboxes and AI Live Testing can help firms trial new ideas safely before going to market.”

THE BOTTOM LINE

The head of the FCA has looked at retirement and concluded that pensions, mortgages, and savings cannot keep operating as separate conversations. For those of us in the mortgage industry, that is worth sitting with for a moment.

The firms that lean into holistic, later-life-aware mortgage advice are going to find themselves well positioned with both the regulator and the consumer. The ones that carry on treating mortgages as a standalone product may find the world moves on without them.

Rathi has told us where he thinks this is all heading. The question is whether we are ready to go there too.