With the Financial Conduct Authority’s market study of the later life lending sector underway, one whole-of-market later life lending business says it is engaging with the regulator on product suitability, accessibility and consumer outcomes, leveraging the group’s experience across consumer advice and technology infrastructure.
Equity Release Group (ERG) says the later life lending sector faces a “critical evolution point” and has welcomed the review as an opportunity to explore how the market can evolve while maintaining high standards of consumer protection and advice quality.
The study has been launched to determine how prepared the market is to meet the needs of consumers when it comes to releasing equity in later life. Government analysis of future pension incomes shows 43% of people are under-saving for retirement, with the FCA saying lifetime and retirement interest only (RIO) mortgages could play a greater role in enabling consumers to live comfortably in later life and/or continue to make standard mortgage repayments into retirement. It will examine whether the later life lending market is functioning effectively and delivering good outcomes for consumers with these new challenges in mind.
In its terms of reference for the study, the FCA said in 2025 around 27,000 lifetime and 3,000 RIO mortgages were advanced in the UK, with a value of £2.16 billion and £282 million respectively. The median age of consumers taking out these products was around 71, the median property value ranged from £290,000 to £350,000, and the median loan-to-value ratio was around 15% for lifetime mortgages and 27% for RIO products.
ERG said it has held discussions with the FCA throughout the process, with founder and CEO Mark Gregory and chief compliance officer Graham Evans providing practical feedback around adviser journeys, sourcing systems, operational inefficiencies, data accessibility, consumer understanding and the barriers currently impacting innovation and competition across the market.
Gregory said: “The FCA’s market study comes at a hugely important moment for the later life lending sector. The market has evolved rapidly in recent years, but many of the operational requirements haven’t moved at the same pace. What consumers now need from equity release is changing, and the way firms support advisers and customers must evolve alongside that.
“Our discussions with the FCA have focused on the practical realities of how the market operates day-to-day for advisers, firms and consumers. This goes beyond products themselves and looks at the wider infrastructure, alongside the consumer journey challenges.”
ERG said the review comes as the equity release and later life lending market goes through a period of significant transformation, with growing regulatory scrutiny, increasing Consumer Duty expectations and rising demand for more holistic financial planning.
Concluding, Gregory added: “Advisers now need the right tools, infrastructure and support to deliver in today’s market and keep pace with the changing demands of consumers. We believe that the FCA’s study creates an important opportunity for the industry to look at the market more holistically and identify where greater efficiencies can be achieved for both advisers and consumers.”
