24 September 2023

Older borrowers don’t trust financial services

to help them through the cost-of-living crisis

By Livemore

“I once had financial advice from my bank, it was useless and cost me many more thousands of pounds than it should have. I therefore trust no one.”

This comment is from one of our survey respondents in our “The Cost of Living Over 50” project and underlines that a lack of trust has a detrimental impact on the financial services industry as well as individuals.

Our survey found that 59% of borrowers between the ages of 50 and 79 do not trust financial services to help them through the cost-of-living crisis. This is quite startling, but it begs the question, why don’t people trust financial services? After all, we are here to help.

The quote above shows that people don’t always receive the best advice. Just look at all the various mis-selling scandals over the years – two of the biggest being pensions and PPI.

Financial Conduct Authority (“FCA”) disappointed in the sale of lifetime mortgage sales processes

The FCA recently published a review into lifetime mortgage sales and found in many cases the advice did not meet the standards expected.

It was also disappointed in the financial promotions associated with lifetime mortgages, and found 400 cases where they had to be taken down or amended. Findings like this really do the industry no good and improvements must be made if we want customers to trust us.

The FCA said of lifetime mortgages in its review: “These complex products are often sold to customers with a higher risk of being in vulnerable circumstances so it’s essential they are fully informed and receive suitable advice.”

One of the main issues the FCA found was that individual circumstances had not been properly considered and advice lacked discussion of alternatives.

At LiveMore, finding the right solution for the right client is at the heart of what we do – and we believe that all lenders and advisors should consider all options available, particularly in the case of potentially vulnerable older borrowers.

How can we increase trust as an industry?

Lenders and intermediaries have a duty to serve customers and attain ‘good outcomes’ as set out in the Consumer Duty rules. While this sounds like common sense, the FCA report underlines why we published a white paper (3mb pdf) in June, Consumer Duty: why later life lending is about to change forever, which highlights why Consumer Duty is good for the industry.

What can I do as a broker?

Embracing Consumer Duty is a way that all of us can increase trust in the industry. For example, with older borrowers, we always advocate that a full affordability assessment is carried out before any

mortgage decisions are made. You are then in a good position to be able to consider all products, including lifetime mortgages, whether that is a referral or advising on the case yourself.

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