FCA’s Bailey questions lifetime mortgage regulation

FCA chief executive Andrew Bailey has questioned if mortgage regulation meets the needs of older homeowners and hinted at changes to later-life mortgages.

Speaking at the City Banquet at Mansion House, Bailey tonight said the regulator is looking at the issues facing older consumers.

“We looked at upper age limits and product innovation in the mortgages sector and whether they meet the needs of older consumers,” says Bailey.

This includes identifying barriers to developing products or services which could support older consumers.

Speaking on homeowners and housing as an investment, Bailey says: “We think there is more we can do.”

The regulator is publishing proposals which would make it easier for providers to lend to older people, with the borrower committing to pay the monthly interest and the loan eventually being repaid by sale the property.

Bailey says the watchdog had also considered whether consumers have sufficient access to regulated financial advice that is clear, accurate and appropriate when looking to fund their long-term care needs.

The FCA has been tasked by Government to ensure appropriate consumer protection is in place. Bailey says lower savings rates, slower economic growth, rising debt and the rising cost of retirement were important factors in the current outlook.

Ageing population

The three main areas the FCA is focusing on are consumer credit, long-term savings and retirement provision, and other impacts of an ageing population.

Bailey says technological innovation is changing financial services, and many older people are unsure of or unable to use new technology.

“Increasingly, firms have access to big data to manage customer risk and pricing. There are many good aspects to this but also some dangers which can be exploited. An example is using information to identify and exploit customers less likely to monitor the market to get the best pricing. Older people can be among these groups. We have seen it happen,” he adds.

Bailey concludes: “The FCA is a fascinating place to be and I think we can serve the public interest better by getting to grips with these big issues.”  

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