Speaking on a panel at the Mortgage Solutions Later Life Lending Event last week, Merrett (pictured) said providers needed to support people at all stages of retirement.
“Where we need to really break down silos is between the two markets. We’ve got equity release products that have some fantastic features, we have mortgages that have fantastic features. What we don’t have is something that sits properly in the middle.
“RIO [retirement interest-only] is a great idea but it doesn’t work, it hasn’t taken off, we can see that in the volumes.”
He said people wanted products which allowed them to get a level of borrowing based on their current income but did not want to service the interest. Merrett said an offset mortgage met those needs, but the maximum age limit of 65 did not address the needs of older borrowers.
“If the product features of something that bridges that gap are more akin to the product features of equity release, then more people will feel comfortable taking equity release in the future. And it serves as a better segway to that product in later life,” Merrett added.
Offering holistic advice
Speaking on encouraging holistic advice in the sector, Merrett said firms needed to identify their own vulnerabilities and which parts of the market its business cannot deliver on.
He said it was also important to have a modicum of understanding to know when to consider other options.
David Forsdyke, head of later life finance at Knight Frank Finance, said it was about setting up a structure which allowed holistic advice to take place when needed. He said this could include forming partnerships and creating a referral panel to address different needs.
He said the sector would “never completely break out of siloes” but it needed to “lower the walls to we can look over and see where things can go right.
“That’s where Consumer Duty is taking us. We’ve got to create the awareness for all advisers.”
Rob Sinclair, chief executive of the Association of Mortgage Intermediaries (AMI), said it was not about the capability of individual advisers but the capabilities of the firms.
He said it was within the rules of regulation to focus on one area of the market but an understanding was required.
Sinclair said the sector needed people “who advise, not product sell”.
He said lenders would expect that all solutions had been considered before locking a customer into a particular product.
Sinclair said focusing on identifying a client’s needs first would lead to a more holistic approach.
Broader awareness
During a separate panel session, Les Pick, director of manufacturing and adviser proposition at More 2 Life, said equity release was a product which would do an awful lot of good, but people needed to know the impact of the decision.
He added: “These further education pieces that aren’t necessarily mandatory, these facilities that are available to advisers at a low or no cost, people should take them because these products that we advise on today will have an impact in later life. Particularly if interest rates are higher that will have a bigger impact on your estate.”
Need for innovation
Pick said the later life lending sector often fell behind the residential market when it came to the products on offer, and he suggested this could be widened. Pick proposed broadening the types of properties lent on by pricing the risk into the cost of products, and bridging the gap between lifetime mortgages and RIOs.
He added: “Somebody somewhere has got to take the step.
“I’d be super excited about bringing something like that to market. If this year doesn’t force innovation, I don’t know what will.”
