The Financial Conduct Authority’s targeted support initiative risks overlooking later life lending, potentially limiting good outcomes for over-55 homeowners, a later life lending specialist warns.
Key Partnerships, the referral arm of Key Group, is urging firms to ensure customers are signposted to specialist advisers so property wealth can be properly considered as part of retirement planning.
While the company says the rules are “a fantastic opportunity”, it points out that the changes – which come into force on the 6th April – don’t include later life lending options, despite many older customers who could benefit and may have substantial property wealth and little in the way of savings and investments.
“In order to ensure good outcomes for customers, the home has to be included in retirement planning conversations, but the scope of targeted support does not currently include later life lending options,” Key Partnerships director Damon O’Connell said.
“However, firms that offer targeted support propositions should signpost customers to specialist advisers who can assess whether products such as modern lifetime mortgages can be used as part of retirement planning conversations.
“Later life lending products are increasingly relevant to all over-55s homeowners and can support needs such as more efficient management of existing debt, a boost to retirement income, home improvements to potentially make a property more suitable for later life living and eventually to perhaps help finance care provision in the home.”
The initiative is part of the FCA’s Advice Guidance Boundary Review, clarifying the boundary between guidance, targeted support, and full advice, and gives consumers protections under FCA rules and the Financial Services and Markets Act.
Designed to provide clients with more choice, and to close the UK’s advice gap by bridging the space between generic guidance and individualised advice, firms that can be authorised include banks, pension providers and other financial firms. The rules allow finance professionals to offer more targeted propositions without providing full advice, potentially reducing costs and expanding reach.
Financial firms will be able to define customer segments based on characteristics such as age, pension type, risk profile, or investment goals, requiring careful planning, governance, and awareness of scope limitations.
