Ageing Population and Financial Services Equity Release Council AGM, - - PowerPoint PPT Presentation

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Ageing Population and Financial Services

Equity Release Council AGM, 28th April 2016

Linda Woodall, Director of Life Insurance and Financial Advice and Ageing Population Project Sponsor

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Our ageing population

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11.4m people aged 65+ in the UK People aged 85+ represent the fastest growing population segment There are now more people in the UK aged 60+ than there are under 18 1 in 3 babies born today expected to celebrate their 100th birthday Between 2016 & 2061, age-related spending is projected to increase by 5% of GDP Globally, those aged 65+ will outnumber children under 5 by 2050

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What types of issues have we found?

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“We should be aware that retirement decisions are unlikely in the future to be

• ne-off”

Nigel Keohane, SMF “Access to products & services can be a problem: older people are less likely to be digitally included – although this is changing rapidly” Sue Lewis, Financial Services Consumer Panel “There may well be a role for lenders, insurers and/or pension providers to get together to design the retirement mortgages of the future.” Paul Broadhead, BSA “Day-to-day, older people tend to rely less on fluid intelligence – reasoned, deliberative thinking & more on gut-feel, intuition, rules

• f thumb and shortcuts”

Behavioural Architects “Few advisors cover residential & lifetime mortgages & investment

• advice. Advice is

segmented, due to different regulatory regimes” June Deasy, CML

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FCA Ageing Population Project

4 Working with industry / consumer groups For others Working with Government Policy work Internal Workstreams (e.g. Equality impact) For the FCA Supervision / Firm engagement More research / investigation Inputs from other FCA work (e.g. FAMR, Pensions)

Strategy on Ageing (expected Q2 2017)

Discussion Paper, Roundtables and inputs from external parties Experts collaborating to deliver solutions of mutual benefit

We launched our Discussion Paper on 22nd February, and the consultation window closed on the 15th

• April. We are currently reviewing responses, alongside evidence and literature, regarding issues

relating to older consumers. We welcome your thoughts on our work and potential areas for us to prioritise. In the meantime, please get in touch with us if you have any thoughts or questions.

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Lending into Retirement- issues highlighted in DP

• Pension freedoms and impact upon affordability
• Segmentation of advice due to different regulatory regimes
• Consistency in understanding of regulatory attitudes and constraints
• Upper age limits in Mortgages
• The need to assess the regulatory regime alongside demographic

changes to ensure it remains fit for purpose

• Challenge of assessing income as people approach retirement

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Discussion Paper Responses

• Our DP window closed on the 15th April.
• We received over 50 submissions from firms, trade bodies, consumers and the

third sector, professional bodies and think tanks.

• Written responses will be considered alongside the face to face engagement we

have had with stakeholders and will help inform our prioritisation of issues.

• We received an interesting response from the Equity Release Council, as well as a

number of member firms. Themes Specifically in the area of Equity Release, numerous industry representatives fed back to us that;

• The market is increasingly competitive
• Consumer demand for equity release products is on the rise
• Consumer satisfaction with equity release products is represented by low FOS

complaints and low buyer remorse

• Current voluntary standards offer a number of consumer safeguards
• There is clear appetite to innovate in this market

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Hybrid Lifetime Mortgage- By consent waiver

• We announced a Modification by consent for a Hybrid Lifetime

Mortgage on the 7th April.

• The by consent relates to a particular form of hybrid lifetime

mortgage (one that starts as interest-only but which converts to interest roll-up whenever the consumer chooses).

• Providers will be able to offer these without having to meet the

MCOB 11.6 requirement to assess affordability.

• If you want to take advantage of this modification by consent

you should email centralwaiversteam@fca.org.uk or write to us at Central Waivers Team, Financial Conduct Authority, 25 The North Colonnade, London, E14 5HS.

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Collaborative working

• This regulatory issue in relation to by consent mortgages was brought

to our attention through the FCA’s engagement with industry and other stakeholders.

• The by consent is an example of the FCA working alongside industry to

discuss and remove regulatory barriers, in the interests of consumers.

• We have received positive feedback on the waiver, and we thank the

ERC for their public statement of support.

• We are keen to bring to light more opportunities for markets to adapt

and better meet consumer needs in the future.

• We recognise that we need to work together to find solutions- we are

keen to engage with you and to lead a helpful, forward looking debate.

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Next Steps

• This project is an example of proactive regulation, and an area where

we believe that the FCA can take a leading role in driving better market

• utcomes.
• The output of this project is a regulatory strategy for older

consumers (to be launched in 2017).

• Our DP consultation phase closed on the 15th April and we are in the

process of reviewing responses. Alongside this, we’re conducting a programme of research and we will be holding a series of roundtables to discuss specific emerging issues.

• At this stage in the project, our scope is relatively open. We are

currently in the process of prioritising issues and setting the direction of travel, so we would encourage you to get in touch with any information relating to challenges and opportunities facing the ageing population.

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