Brokers and lenders must take reasonable care to ensure borrowers’ capacity and document it to ensure they are protected if their advice and products are challenged by claims firms, he told industry professionals at the law firm’s lending into retirement conference today.
Though it is still unclear whose responsibility it actually is to assess vulnerability, Saunders (pictured) said one of the biggest challenges for the industry will be creating a framework, asking: “You are not doctors. How are you going to assess it and work it out?”
Saunders said claims could initially reduce lending and make lenders more picky, however, he added that they have to accept the risk that comes with lending to older borrowers as this is the way the market is moving.
Andrew Montlake, director at Coreco, said: “Whenever something like that happens, if it were to happen, the lenders would run for the hills and probably pull back on the type of lending that they were doing. Anything that starts getting bad press and lots of complaints is something they would likely want to pull back from until the market has calmed down.”
Saunders revealed just under half of UK adults have a numeracy attainment of 11 years old and below, and that the one in seven UK adults have literary skills of 11 years old and below.
The figures show this is a multi-faceted issue that touches the average borrower and beyond dementia and old age.
He said it is hard to predict what will happen in the near future, but added: “It’s in the short-term we will get claims and have issues. In the long-term, we will get it right.”
Montlake added: “The problem is that client management firms are coming to the end of their PPI caseload and are looking around for other sectors to target, and lending into retirement might be one. I don’t think there will be as much of an issue as there was with interest only. There are concerns, but I don’t think they’re massive.”