The FCA has spoken but are you listening? – Davidson

The mortgage industry now seems to have accepted that later life lending is no longer a niche product category.

For brokers who do not currently advise on lifetime mortgages, this presents both a challenge and a significant commercial opportunity. If you refer these clients wisely and to the right referral partner, you deepen trust with your clients.

The Financial Conduct Authority (FCA), under CEO Nikhil Rathi, recently stated that today’s UK mortgage market is very different from the pre-2008 era. With most homeowners now holding greater equity and fewer interest-only loans on lenders’ books, the regulator acknowledges the need to revisit traditional lending constraints.

During a recent appearance on the Fairer Finance podcast, Rathi said the regulator was “mindful” of the potential consequences of loosening lending standards, yet also signalled a broader review of how the mortgage market serves consumers over a lifetime. So, rather than brokers (and lenders) simply fighting over the well-served first-time buyer market, there’s a broader rethink of how housing wealth fits into people’s long-term financial wellbeing.

Industry commentators interpreted Rathi’s comments as a sign that later life lending will play a more central role in financial advice. The new direction of travel suggests fewer prescriptive rules, and instead, a greater reliance on principles such as Consumer Duty, with more accountability for advisers regarding customer outcomes.

That regulatory evolution matters for brokers.

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Getting out of your comfort zone

Consumer Duty places a clear onus on advisers to consider all relevant options for clients, particularly those approaching retirement with limited savings, maturing interest-only mortgages and significant housing equity.

Failing to consider later life lending options, including those that are technically outside of an individual adviser’s own licence, may not sit comfortably with the spirit of those expectations. The emphasis is increasingly on whether the client received a good outcome, not whether the adviser stayed within their preferred product set.

For brokers who do not currently advise on lifetime mortgages, this brings two realities into focus.

First, demographic and financial trends mean more clients will carry debt into later life. Pension provision remains mixed, and for many households, property is their largest asset. Unlocking housing equity responsibly is becoming part of mainstream financial planning rather than a last resort.

Second, regulatory emphasis on outcomes over product prescription means advisers should at least signpost or refer where appropriate. It is no longer sufficient to exclude a product because it falls outside your permissions or comfort zone.

Advisers should be able to demonstrate that they have considered whether later life lending is relevant and, where appropriate, have directed the client towards a specialist.

 

Feeling assured

One of the biggest barriers advisers cite regarding lifetime mortgages is confidence; confidence in the products themselves, given the dodgy selling practices of years gone by and how to communicate it. Later life lending conversations are often sensitive, involving family members, inheritance considerations and long-term planning.

Without the right tools and support, many brokers would rather avoid the topic entirely. Recent developments in the market are addressing that gap.

Providers such as Pure Retirement have expanded their white-label marketing toolkits to help advisers. These resources include traditional and digital materials such as event banners, flyers, social media templates and email campaigns, all customisable with an adviser’s branding. The aim is to allow brokers to communicate confidently and consistently, without having to build educational materials from scratch.

Importantly, the enhancements to these toolkits have been developed in response to adviser feedback, reflecting a clear demand for structured support. They include guides on topics such as involving family members in conversations, understanding how interest rates are calculated and explaining product features in straightforward language.

In other words, the industry recognises that later life lending needs to be normalised and better understood, not treated as an obscure specialist corner of the market.

 

Build a solid referral plan

For brokers who do not want to advise directly on lifetime mortgages, this creates a compelling middle ground. You do not need to become a later life specialist to serve your clients well. However, you do need a robust, transparent and trustworthy referral pathway.

There are strong reasons to put one in place.

First, it protects your client relationships. Clients approaching retirement may face maturing interest-only mortgages, affordability constraints or insufficient pension income. If you cannot help and do not provide a clear referral option, they will look elsewhere. Once they establish a new advisory relationship, you risk losing not just that case but future opportunities.

Second, it strengthens your overall proposition. Being able to say, “This falls outside our direct advice remit, but we work closely with a trusted specialist and will oversee the referral,” reinforces your position as a comprehensive adviser. It demonstrates that your focus is on outcomes, not product silos.

Third, it aligns with the direction of regulation. As the FCA signals a move towards principles-based supervision and outcome assessment, advisers should be thinking holistically about client needs across the lifecycle.

Later life lending is part of that lifecycle, and a growing one at that. A documented process for considering and referring cases is far easier to defend than a blanket exclusion.

Finally, there is a commercial argument. Later life lending is a growing segment of the market. With housing wealth concentrated among older borrowers and many people working longer or carrying debt into retirement, demand is unlikely to diminish. Structured referral agreements can provide an additional income stream without requiring you to take on the compliance and advice burden of becoming a specialist yourself.

 

How to begin advising holistically

So, what practical steps should brokers consider? Start by reviewing your existing client bank. Identify clients within 10 years of retirement, those on interest-only terms, or those who have previously discussed affordability concerns in later life. These are the cases where later life lending may become relevant.

Next, establish a formal referral arrangement with a specialist later life adviser. Clarity is key: agree how introductions are made, how communication will flow and how client outcomes will be reported back to you. The process should feel seamless from the client’s perspective.

Consider using white-label educational resources to introduce the topic gently. You are not advising on the product; you are helping clients understand that options exist. Early education reduces stigma and ensures that conversations happen before financial pressure becomes acute.

Finally, embed later life consideration into your advice process. A simple documented question – for example, how the client intends to manage borrowing into retirement – can prompt appropriate discussion and demonstrate that you have considered the full picture. Regulatory commentary, demographic reality and industry innovation are converging to bring later life lending into mainstream conversation. For brokers who have historically stayed away, this is not a threat but an opportunity.

You do not have to become a specialist to play a role in this market. But you do need to recognise that your clients’ financial and borrowing journeys do not end at retirement. By building strong referral relationships, leveraging the support tools now available and aligning your processes with an outcomes-focused regulatory environment, you can continue to serve clients comprehensively, while positioning yourself as a forward-thinking, authoritative voice in a changing market.

In the years ahead, the brokers who thrive will be those who see later life lending not as someone else’s niche, but as a natural extension of responsible, whole-of-life advice.