Earlier this week, an occasional paper from the Financial Conduct Authority looking at consumer access to financial services, stated the task of assessing whether someone could still afford a mortgage in the future had become more challenging.
“The inclusion of future changes in income and committed expenditure is challenging, especially where the mortgage term would extend into retirement or the applicant is already retired,” read the document, adding increased difficulty since the introduction of pension freedoms and the deferral of measures that would have provided some cap on care costs.
The regulator backed concerns expressed by the Council of Mortgage Lenders that mortgage advice alone may be inadequate for decisions about borrowing into retirement, noting suggestions that Pension Wise could be extended to give more holistic support across retirement issues and that mortgage advisers may need to have a wider range of expertise.
“The term ‘jack of all trades and master of none’ springs to mind” Karen HedgesKaren Hedges, mortgage manager for First Complete, stated one adviser providing ‘holistic’ advice covering all areas of financial planning was just not viable.
“That said, it is important that advisers have the ability to refer a customer to other specialists for advice on other product areas, suiting borrowers at all stages of their homeownership journey,” she said.
“A professional mortgage adviser therefore needs to be aware of the criteria and processes of different lenders, as well as the disparate regulatory requirements, to ensure every customer receives the best advice relative to their circumstance.”
Ms Hedges pointed out to help ensure customers remain in their home if the unforeseen should happen, most brokers advise on protection as well as general insurance.
“First Complete have a number of firms that include separate mortgage, protection and GI specialists, along with firms that only specialise in one product area.
“But to expect them to hold the same level of knowledge for pensions and investments is a step too far - the term ‘jack of all trades and master of none’ springs to mind.”
TenetLime’s managing director Gemma Harle agreed consumers need to consider their retirement strategy if they are taking their mortgage out in later life or for a longer term, adding when people review retirement strategies they should also review mortgages.
“However, any holistic advice does not need to be from one advisor - they just need access to advice that covers all of their needs.
“A lot of firms provide this in their practice already, as they have some advisors who specialise in mortgages and others who specialise in investment.”
Mike Richards, director of London-based broker Mortgage Concepts Associates, previously said the problem is that most pure mortgage advisers are not licensed to give advice on things like pensions and investments.
“It is a nice idea but it is a very difficult thing to suggest,” he stated, adding “I don’t think many mortgage advisers are going to go and take all the exams to become full advisers”.
peter.walker@ft.com
