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Advisers need to take cross-sector approach to retiree lending – FCA
The growing demand for lending solutions for older borrowers means advice must be more ‘joined-up’, according to the Financial Conduct Authority (FCA).
Speaking at the FCA Mortgage Conference in Westminster, Lynda Blackwell, manager, mortgage sector at the regulator (pictured), said that the lending into retirement sector was not just limited by a lack of products, but also in the way that advice was distributed.
The FCA announced earlier today it would engage with industry and consumer bodies over the coming months on possible options for older borrowers who wanted to stay in their home, but were struggling to fund their retirement.
Blackwell said: “There is a tendency to think there is no advice gap in the market as a result of the Mortgage Market Review. One of the key things in the market is the ability for us to think in terms of pension advice, investment advice and mortgage advice and be much more joined-up in the approach that we take.
“We are taking a very sector-based approach today and I think there’s a need for us to take the opportunity to look at that in our review.”
Association of Mortgage Intermediaries chief executive Robert Sinclair agreed that the industry needed to start looking at ways to collaborate further across different advisory sectors.
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“Part of the biggest issue is that when I walk into somebody’s office in terms of planning my decumulation [converting a pension to retirement income], that person is not going to be someone who advises on lifetime mortgages or equity release because it doesn’t fit into the normal rulebook. The person who is doing the decumulation advice will be an investment adviser, with equity release sitting in the mortgage book and we need to rethink this whole structure as an industry and regulator.”
Sinclair warned that if advice firms and advisers did not start to explore varying business models to support this then these businesses ‘would not survive’.
“We have to invest in our future so my plea to intermediary firms is; think about the money you are earning today, think about investing in technology, think about investing in more people and think about investing in back-office support that gives you a better and bigger business,” Sinclair added.
“If you are not in that space then you are not going to survive as the world changes because consumers are going to come forward with the expectation of more rounded advice.”