Too many consumers don't understand their mortgages, says later life lending director
Brokers and consumers need to be better supported, with a drive for greater education, suggests an executive at later life lender, LiveMore.
Its director of intermediary sales, Les Pick (pictured), is concerned that a high number of people don’t understand the mortgage or personal loan products for which they have signed up.
LiveMore takes what it calls a holistic approach to later life lending and offers more than 200 products, solely for borrowers aged 50 to 90 plus.
“We really need to support our brokers and, ultimately, consumers better,” Pick told Mortgage Introducer. “It’s disturbing that some 64% of people have taken out a mortgage or personal loan without fully understanding how it works, according to Money.co.uk. And our own LiveMore survey showed that a shocking 4% of over-50s were aware that they could even get a new mortgage. This needs to change. We need to educate ourselves and educate our customers.”
He noted: “The biggest barrier to success for equity release brokers is that Consumer Duty has put paid to brokers being allowed to sell equity release as a first port of call. They must be able to offer products that are appropriate for each borrower’s needs and circumstances. They need to make sure they understand all the options available, and that they can communicate these in a Consumer Duty compliant way.”
Why Consumer Duty is a wake-up call for brokers
Pick points to what he describes as a ‘hard-hitting’ 2023 FCA report on the shortfalls in Consumer Duty compliance on the approach to selling equity release, which he believes is “a real wake-up call” for many brokers in the sector.
“Brokers who work entirely in equity release, for example, will this year have to upskill so they can provide holistic advice to older borrowers – whether they’re 50 or 90-years-old,” Pick explained. “If they want to remain a specialist equity release adviser, that’s fine, but they will have to demonstrate their triage and referral process, as well as document the outcomes if they are referring interest served business away to another adviser.”
He urged: “As leading later-life lenders, I believe that we are responsible for filling that gap by educating and supporting mortgage brokers and financial advisers the very best we can.”
Pick considers the current, volatile economy a great challenge for lenders and brokers alike.
“It hasn’t been easy for brokers to juggle all the multiple interest rate changes,” he reasoned. “With such a slow market, it’s highly competitive, so brokers are struggling with some rogue elements, such as the significant minority of rogue estate agents undercutting them through conditional selling.
“Despite market volatility, I’m optimistic that this year will be a lot better than last. Consumer Duty regulations will make sure that across the market we all rise to the challenge and make sure we are consistently delivering the best possible outcomes for our customers, particularly our older customers. While it’s a better market for them, challenges like ageism are ongoing.”
He observed: “One advantage of turbulent times is that it always encourages innovation. As an industry, we certainly have our work cut out.”
Pick is in his second month as director of intermediary sales at LiveMore.
“My role here is to support mortgage brokers and financial advisers so they’re better equipped to deliver excellent consumer outcomes in an increasingly complex market,” he elaborated. “I work with LiveMore’s strategic partners to drive up distribution volumes through education, strong relationships and hands-on support.
“We believe that people should be able to stay in their homes as they get older and have the right to get advice and solutions that suit their individual needs. Our oldest new customer was 92-years-old, believe it or not.
“We’re super Consumer Duty focused, and only offer equity release once we’ve looked at all other options. For example, we offer capital and interest, and interest-only products to customers. We take a broad assessment on affordability and property types. It’s a very progressive offering in later life lending. I’ve worked in the industry for 25 years now, and there’s nothing like LiveMore out there.”
What can lenders do to understand brokers’ issues?
To help address the challenges faced by brokers new to the wider later-life market, LiveMore is investing heavily in technology and educational resources, such as broker-focused videos.
Within the wider property market, meanwhile, Pick identifies a need to build more housing.
“Unfortunately, successive governments haven’t grasped that particular nettle, and it will now take years to address the current shortage,” he reflected. “I think that the government needs to support first-time buyers in their quest to get on to the property ladder at an earlier stage. FCA data shows a near 30% rise in the number of first-time buyers over the age of 50 between 2018 and 2022, with an 8% drop in 18- to 25-year-olds joining the property market.”
The UK’s ageing population gives LiveMore an advantage, Pick believes.
“There are now 15.5 million people in the UK aged 60 and over, making up nearly a quarter (23%) of our total population, so our services will always be in demand,” he predicted.
“My experience in financial services tells me that every storm will pass. The mortgage world and the wider financial services industry have always risen to the challenges we face. We have improved our processes and propositions, and we have innovated when required.”
He concluded: “If we are going to be successful, as our population ages and 50 becomes the new 40, we must design products and services that satisfy the demands of our changing population.”
