In October, LiveMore had the privilege of hosting a webinar with industry-renowned Robert Sinclair, outgoing chair of the Association of Mortgage Intermediaries (AMI).
Sinclair and LiveMore’s CEO Leon Diamond shared their views on the mortgage market, uncovering some tremendous later life client opportunities for brokers and keen insights into Consumer Duty.
Here are some of the key takeaways.
Later life opportunity – Leon Diamond
In our healthier, ageing population, we want to help brokers take advantage of the opportunities around the £2.6trn of home equity in the over-65s, the £1.7trn mortgage value and the dominant 78% of housing wealth that is owned by the over-50s.
A worrying 96% of 50-90-year-olds don’t even believe that they can get a mortgage – thinking that equity release is their only option. And a mere 1% of mortgage products on the market are available to the over-55s.
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The current siloed approach in the industry of equity release versus mainstream mortgages doesn’t necessarily result in the best outcome for customers. Instead, borrowers in this age group should also be considered for a wide range of mainstream mortgage options.
The Financial Conduct Authority (FCA) raised concerns in its September 2023 Equity Release Review, which cited that “advice did not meet the standards expected and lacked discussion of alternatives”. Today’s lenders often shoehorn later life customers into the wrong box when it comes to complying with lending criteria such as income sources, which can lead to them selling customers the wrong product.
We want lenders and brokers to come together to give better solutions for these under-served customers, especially considering that this age bracket is the most credit-worthy segment of the population, many of whom have learned resilience during the high levels of mortgage rates in the 1980s.
It is an increasingly complex market, however, with more and more innovative products available for later life borrowers. Luckily, there is also innovative technology to help brokers cut through those complexities and assist with Consumer Duty requirements for better outcomes for clients. The LiveMore Mortgage Matcher does this while at the same time resulting in an average uplift of 41% in the amount clients can borrow.
Consumer Duty insights – Robert Sinclair
Sinclair shared many fascinating insights around factors affecting the market, the FCA and green mortgages. As a trade body for the mortgage industry, AMI plays a critical and constructive role within the regulation process, including around Consumer Duty.
I’d like to zoom in on Consumer Duty and summarise my take on some of Sinclair’s insights.
Nobody is perfect
When submitting their annual Consumer Duty review, every business and organisation should have shared some form of learning and identified areas where they might want to change, amend and improve on.
Measure and learn
One way of helping to understand if there is a Consumer Duty issue in our sales funnels is to better understand customers’ behaviour. For example, why has a customer opted out in the middle of the sales funnel? Is it because they aren’t being offered broad-enough solutions? Maybe a later life borrower has been offered solely an equity release product, when in fact a standard capital and interest mortgage would’ve been better.
Across the whole sales and marketing process, we should all measure and learn.
Protecting vulnerable customers
As an industry, we still aren’t doing enough to protect vulnerable customers. The FCA has written to UK Finance to ask it to identify how we can deal with vulnerability better so that, for example, a customer can tell us something once, and it can be transmitted across all parties in the sector.
And finally, one key element that really hit home during the session is how important it is for advisers to be able to offer a wide selection of products to later life borrowers and, where they might not have that capacity or knowledge, to cross-refer to other advisers who do – and vice versa.
