The lender explained it had been visited on consecutive days by officials from the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) who had each asked it to take a different approach.
Speaking at the launch of its Later life borrowing in a world that’s living longer report conducted by London School of Economics (LSE), Family BS CEO Mark Bogard (pictured) noted that both regulators were worried about borrowers getting into arrears.
“The PRA said to me: ‘Mark, you will kick all these little old ladies out if they are behind [on their mortgage payments]?’” Bogard said.
“And the reason they asked me that is they don’t want us to face the prudential risk of acquiring a large lifetime book effectively by default, with people who aren’t keeping up with their payments getting behind, and so we end up with a credit issue.
“The next day I had a relatively senior person from the FCA turn up saying ‘Mark, you’re not going to kick all these little old ladies out are you?’.”
Bogard noted that this situation was a big reason why the major banks did not like doing later-life lending with the prospect of evictions on the front page of newspapers being “a complete nightmare”.
“How the regulator evolves this, will be very slow and cautious because they do not want old people kicked out,” he added.
Conflict is natural
Speaking during the question and answer session, Bogard later added that it was natural for the two regulators to come into conflict sometimes.
“The prudential regulator wants you to realise the security as quickly as possible to make sure you’ve got no bad debt,” he continued.
“The conduct regulator doesn’t want us to do bad things to good people, and there’s a conflict there.
“In the legislation – the prudential regulation overrides the conduct regulation, but the politics of that are messy because its bankers,” he added.