FCA Mortgage Rule Review: The first step towards advice for the ‘rest of us’ – Davidson

The Financial Conduct Authority’s (FCA’s) comments around later life lending as part of its Mortgage Rule Review come at a crucial moment.

With thousands of homeowners now approaching retirement carrying mortgage debt – a new phenomenon – and property wealth often outweighing pension savings, in my opinion, now is the time for a more inclusive and forward-thinking approach to how we help people fund their retirement. 

The good news? Well, the regulator is certainly asking the right questions, but I feel there’s an even bigger opportunity here, which is to make financial advice more accessible, more joined-up and more relevant for ordinary people. Not just the wealthy few, but the rest of us. 

Here’s how I would respond to the FCA’s four key questions regarding older borrowers and what needs to happen next. 

 

1. Should more borrowers look to later life lending to support their retirement?

Yes, in fact, this is inevitable, but only if the sector needs to do more to position itself as part of mainstream financial planning, not “lending of last resort”. 

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The recent Fairer Finance report published with the Equity Release Council shows that unlocking property wealth could inject £21bn into the economy each year by 2040. More than that, though, later life lending can help people live better instead of just getting by. 

The challenge is that many people don’t know if it is an option for them, and even when they do, they’re often unsure where to go or who to trust – how many times must this sector have to be told to up its game? 

If we want more people to make informed decisions about housing wealth in retirement, we need to simplify the journey and broaden access to advice. 

 

2. How can the rules support innovation in later life lending?

The answer to this lies not just in new products, but in new thinking, especially around affordability. 

It’s encouraging that the FCA is exploring expanding evidence of rental conduct as an indicator of affordability, but it does not seem to mention evidence of previous mortgage payment history. A client who has never missed a mortgage payment in 25 years is surely giving a lender one of the strongest affordability signals there is, yet under current criteria, that history often counts for nought. 

By allowing lenders to take a more rounded, evidence-based view of affordability – particularly for older borrowers whose income may be lower but whose track record is strong – we can open the door to fairer, more flexible solutions. 

 

3. Should it be easier to access products like RIO and lifetime mortgages?

Since the Retail Distribution Review (RDR), many consumers with modest pensions have been priced out of independent financial advice. Mortgage brokers are certainly more accessible – we will speak to anyone – but many don’t feel confident advising on retirement interest-only (RIO) or lifetime mortgages. 

That leaves a large group of consumers under-served. 

More collaboration across the industry is a must. IFAs, mortgage brokers, lifetime mortgage specialists and the rarely talked-about long-term care planners should be working together instead of in silos. Let’s make referral pathways clearer, introduce shared training modules and perhaps even implement an annual knowledge check for advisers who refer older clients to specialists.

That way, even if someone doesn’t advise directly, they’ll know when and how to point people in the right direction. 

 

4. How effective is advice in this area and how can it be improved?

Advice is only truly effective when it’s joined-up, holistic and personalised. At the moment, that’s not always the case. 

For too many clients, the journey feels fragmented. They might speak to a mortgage adviser, then an IFA, then someone about long-term care, with little coordination between them all, when they could be part of the same ecosystem. That’s confusing and disheartening for older customers, especially when the stakes are so high for them. 

We don’t need a new layer of regulation to fix this. What we do need is better industry alignment and a clear, consistent message that later life lending is not niche, not taboo and not exclusively for the desperate. It’s a valuable tool that should sit alongside pensions, investments and right-sizing as part of a modern retirement strategy. 

This FCA review is a chance to reimagine what good advice looks like for people in later life. It’s about more than unlocking property wealth; actually, it’s about unlocking confidence, choice, and control. 

Let’s build a system that works not just for the well-advised few, but for the rest of us too. 

That means: 

• Recognising housing wealth as a core part of retirement planning. 

• Supporting innovation in affordability assessments. 

• Making advice more accessible, especially for those with modest pensions. 

• Encouraging professionals across disciplines to work together, not apart. 

 

The future of later life lending should be destigmatised, inclusive, trusted and empowering. If the industry can rise to the challenge, there’s a real opportunity to make a meaningful difference for individuals, families, and the UK economy as a whole.