FCA expectations around later life lending advice and why it matters
Blog
As part of Consumer Duty, advisers are required to explore all later life lending options with their customers. Below is a roundup of the ‘what and why’ of later life advising to ensure good customer outcomes in line with consumer duty principles.
FCA expectations
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- Conduct affordability assessments: Advisers must ensure that affordability assessments are thorough and aligned with customers’ financial situations, considering their disposable income and any potential vulnerabilities.
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- Promote regular payments: Where applicable, encourage customers to make regular interest payments to minimise interest roll-up, reducing the long-term financial impact on their estate
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- Tailored advice: Provide advice that reflects the customer’s circumstances, particularly in light of increased financial vulnerabilities due to cost-of-living pressures.
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- Monitor outcomes: Ensure that the recommended product meets the customers’ needs and perform as intended over time.
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- Act responsibly: Avoid recommending products to younger customers or those outside the target market without strong justification.
Why they are important
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- Reduce financial impact: By encouraging payments, brokers help customers avoid the compounding impact of interest roll-up, preserving more of their estate.
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- Fair treatment of vulnerable customers: Many lifetime mortgage customers are in vulnerable circumstances. Proper affordability assessments ensure they aren’t placed in unsuitable or unaffordable products.
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- Compliance with regulations: Aligning advice with FCA principles ensures advisers meet regulatory standards, especially concerning fairness, responsible lending, and avoiding foreseeable harm.
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- Support financial resilience: Identifying affordability helps prevent financial distress and ensures customers can sustain their financial commitments even during challenging periods.
How does this shape what Key Partnerships offer?
When referring your older clients to us we take a rounded approach to advice in-line with these expectations and principles. We always look across wide pool of later life lending products with affordability at the heart of the advice process including standard lifetime mortgages, interest served and payment-term lifetime mortgages to find the right one for your client.
Our ‘Later Life Navigator’ tool is at the heart of our advice process. You can watch a demo of the tool here »
