Later life lending ‘must be part of standard mortgage qualifications’

Later life lending qualifications should be part of standard qualifications to be able to advise on mortgages, Key Advice, the UK’s leading equity release adviser, says.

Its response to the Financial Conduct Authority (FCA) Future of the Mortgage Market Discussion Paper which closes to consultation on 19th September stresses the need to ensure that older borrowers are being made aware of the full range of borrowing options.

Questions highlighted in the FCA’s paper launched in June include “How effective and holistic is advice on later life lending? How can our rules support borrowers to access more effective information or advice to support their needs?”

Key believes merging CeMAP qualifications which are required in order to be able to advise on mainstream mortgages with CeRER, which is the qualification currently required to advise on equity release, would be a huge step forward in addressing those issues and breaking down silos.

Mortgage brokers must be better prepared to support customers’ later life lending needs and a single standard mortgage qualification would ensure they are able to consider the full range of options available to borrowers aged 55-plus. This is not to say that all advisers would necessarily provide advice on all products. A firm or adviser may still want to limit their scope of advice and instead work with a referral partner. However, all advisers should be equipped with the basic knowledge required to deliver good outcomes for this increasingly important cohort of customers, particularly with the FCA Discussion Paper itself highlighting the number of working age people under saving for retirement and seeking views on how this could addressed. 

Alongside the harmonisation of qualifications Key proposes that it should be mandatory for Continuous Professional Development (CPD) to include an element of content specific to later life lending. In a sector which has seen rapid innovation in areas such as retirement interest-only (RIO) mortgages and term interest-only mortgages as well as lifetime mortgages with flexible repayment options, it is vital that advisers keep up to date with all the options that may be appropriate for a customer’s needs and circumstances. 

Introducing an updated qualification for the UK’s 37,000 qualified mortgage advisers would help address the FCA’s call  for “more effective information or advice”, Key says.

Charlotte Allen, Chief Risk and Compliance Officer at Key Group, said: “Introducing a single qualification to advise on all types of mortgages,  including later life lending, would ensure that those over 55 are offered the right options according to their circumstances and be a step towards removing the lottery of outcomes being determined by what type of adviser a customer happens to engage at outset.

That is fully in line with Consumer Duty obligations and should be considered seriously as part of the FCA’s mortgage market discussion.

All advisers must advise and not simply be order takers. Often customers come to advisers not having the information they need to be making informed decisions. Whether you are an equity release specialist or a mainstream adviser, not defaulting to one product type, not passively facilitating a re-mortgage or product transfer, considering all options and being prepared to challenge customers on their preconceptions should be part and parcel of the role.  

The current qualifications regime does not reflect how the product landscape and customer needs have evolved in the later life lending market. Customers are coming onto the property ladder later, mortgages often have longer terms and taking mortgage debt into later life is becoming the norm. All advisers should be able to talk to older customers about all the options available to them, even if some products are outside of the scope of the advice they wish to offer, and introducing a single qualification alongside industrialising referral mechanisms would be a positive step in breaking down the current silos and improving outcomes.