Speakers at the Financial Services Expo in London yesterday praised retirement interest-only mortgages but added that they should be aligned more closely with equity release options for the good of customers.
Talking at a session titled “A meeting of trade body minds,” BSA head of mortgage policy Paul Broadhead said: “There’s not been a great deal of innovation in the retirement lending space for a number of years.
“RIOs are a welcome addition but are starting from a low base. We do, however, need to bring the RIO and equity release industries much closer together. There is a need for more innovation and I think we will see… [this] in the future”
The Equity Release Council chief operating office Donna Bathgate added that she was keen to see later life lending products in the context of advice: “We were very supportive of RIOs coming to market, but this has to be all wrapped up around the application of advice to the consumer… It’s so important that the advice given is robust, thorough and considers the future.”
UK Finance director of mortgages Jackie Bennett commented: “As the market becomes more complex, the customer needs quality advice. This is why holistic advice is so important but at the moment there’s no one place where consumers can go and get that advice.
“In terms of both RIO and lifetime mortgages, we do need to join these markets together a bit more seriously.”
“The problem is regulation is in silos in this part of the market, but the consumer is not,” added Ami chief executive Robert Sinclair. He also pointed out that because firms are dependent on authorisations, some advisers offered only RIOs, some only equity release and some both.
“There is a risk here to firms – they could get claims because the firm closed down the conversation with the client too early,” he said.