Robert Sinclair, Senior Advisor at AMI As our population ages and many will have insufficient pension provision, some will look to their property asset as a source of improving their retirement journey. This might be because they still have a mortgage, need to spend on their property or have long term care needs. Others may wish to pass on wealth early, fund education or provide house deposits for family. Whilst for many a lifetime mortgage may look attractive, particularly via some very glossy but unbalanced advertising, the fact the solution exists and is on the shelf does not reduce the role of the adviser in giving consumer-based advice. Options of sale of property, unsecured, conventional mortgages, RIO and lifetime alternatives must all be on the table. Significant discussion centres on the need for holistic or product agnostic advice that I feel misses the point – the advice must be customer centric. In a world where the product boundaries are blurring, full consideration of all options through the customer lens is the only safe place for advisers to be. Critical is the ability to refer where you do not offer the best solution. The FCA has been becoming increasingly vocal on these points, and is disappointed to find continuing evidence of firms not acting on their 2020 findings, discovering many examples where intermediaries are still: • Poorly considering borrowers’ income and expenditure. • Minimising discussions around alternatives. • Incentivising sales potentially at the expense of quality advice and good customer outcomes. • Steering outcomes in favour of lifetime mortgage products. In the FCA's October 2024 letter to lifetime mortgage providers it states: “We see our responsible lending requirements as especially important for later life lending, including lifetime hybrid products where consumers are expected to service mortgage payments. We expect firms who operate in this market to pay particular attention to signs of vulnerability. Firms should ensure that poor product design and governance does not lead to consumers purchasing later life products they don't fully understand, and which do not meet their needs.” Its 2025 mortgage intermediary strategy letter sets out: “In the lifetime market, we have already outlined our findings on the shortcomings. Where customers have more complex financial situations, firms should assess their needs and circumstances, ensuring they have adequate processes in place to identify and take account of vulnerability. Conflicts of interest, when not properly identified and managed, can drive a high pressure sales culture in the mortgage intermediaries’ market. Recent supervisory work has shown some firms have a culture Advice is totally on the Hook 08 MORTGAGE NEWSLETTER
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