'Retirement lending is a crucial part of FCA review'

Retirement lending must be looked at as a crucial element in the FCA’s probe into barriers to mortgage sector competition, The Equity Release Council says. The organisation has asked the regulator to consider whether a relaxation of mortgage affordability rules could help more lifetime mortgage customers take up the option to make interest repayments initially before switching to a roll-up arrangement.The request from the council formed part of its evidence submission to the FCA’s call for inputs on competition in the mortgage market. The FCA is set to outline next steps in the form of a summary statement in the first quarter of 2016.Nigel Waterson, Chairman of the Equity Release Council, said: “We welcome the proactive decision by the FCA to review whether there are any barriers to competition in the mortgage sector.“Retirement lending is a crucial part of this and there needs to be careful consideration of the factors which differentiate ‘residential’ and ‘lifetime’ borrowing.”{desktop}{/desktop}{mobile}{/mobile}The council has asked the FCA to consider whether a relaxation of rules originally designed for residential rather than lifetime mortgages would help more consumers unlock their housing wealth while protecting a larger amount of equity in their property. A relaxation might also support existing providers’ ability to expand their product range and encourage new entrants, the council said.The council’s submission included a separate request for the FCA and Government to consider the long-term impacts of decisions relating to tax and regulation which may affect equity release lending.Mr Waterson said: “As part of our wide-ranging input we highlighted that revisiting affordability rules may help more consumers to make use of options already offered by equity release providers in later life, as well as encouraging more new entrants to the market.“There is a growing recognition that equity release has an important part to play in the planning of funding for later life, and we look forward to working together with the FCA on the back of its findings.”It also recommended that the FCA engages with the Prudential Regulatory Authority to consider how equity release is currently funded, the extent to which current prudential requirements create barriers for firms and whether a broader approach could be taken which would enable alternative sources of funding to be accessed.

'Retirement lending is a crucial part of FCA review'

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