The CML has called on government bodies and regulators to take drastic action to improve the mortgage market for older consumers.
In its 29-page Retirement Borrowing: Reality, Perceptions, Projections and Potential report, the trade body said the current environment made it too difficult for older borrowers to borrow in retirement to meet various needs.
Admitting that the CML and its members needed to “continue to work with the intermediary sector towards a more seamless advice framework”, it pledged to work with advisers “to identify how to improve “hand-off” arrangements between different advisers when this would best serve the customer’s individual needs.”
It also called on the FCA to address how softening regulation could encourage “a more holistic approach to mortgage, lifetime and investment advice, which is what many older borrowers need”.
The CML asked the FCA to work with the industry to provide a standard definition of retirement.
It also called on the PRA to ensure its work on defining acceptable models for Solvency II, involving requirements for matching assets, did not lead to an unintended consequence of withdrawal of products or failure to introduce products that would benefit consumers.
The report also said: “HM Treasury must consider introducing tax relief on professional advice received at retirement, to encourage take-up, and ensure that the Financial Advice Market Review is mindful of the need for joined-up, multi-disciplinary advice for older consumers.”
| Mortgage Conduct of Business handbook |
The FCA’s Mortgage Conduct of Business handbook (MCOB 11.6.47G) already suggests that the sale of the property under a lifetime mortgage is a possible way to meet our rule on the need for a credible repayment strategy. The handbook says: “In complying with MCOB 11.6.41R, where a customer’s repayment strategy is the sale of the property which is the subject of the regulated mortgage contract, a mortgage lender may wish to consider, as part of its assessment of that repayment strategy, factors such as the equity in the property when considered in relation to the level of property prices in the relevant area at the time of the consideration or, for a lifetime mortgage, the borrower’s life expectancy.” |
Paul Smee, director general of the CML, said: “There is no silver bullet to address the complex issues involved in the housing and financial needs of older borrowers, but it is hugely significant that so many willing participants from across the mortgage industry and beyond are now collaborating to try to put this jigsaw together.”
Nigel Waterson, chairman of the Equity Release Council, welcomed the report for putting “equity release at the heart of its thinking on borrowing in retirement, which gives further recognition for the need to consider unlocking housing wealth later in life as an option to boost income”.
However, Mr Waterson said he did not agree fully with the report’s recommendation to soften regulation as a potential stimulus for growth in equity release lending. He said: “the risk of that comes at the cost of reduced consumer protection.
“It is important advisers are qualified to give advice on equity release to protect against mis-selling.”
Adviser view
Mark Harris, chief executive of London-based mortgage broker SPF Private Clients, said: “Something desperately needs to be done to make it easier for older people who want to borrow into retirement to do so.
“This report is the first step; now roundtable talks bringing together all the interested parties, such as regulators, lenders and trade bodies to devise a clear and transparent framework, are essential. More needs to be done to protect the vulnerable and more flexibility needs to be given to those who need it.”
