FCA urges later life lending expansion as UK retirement funding pressures grow

Traders Union
All News
Regulators News
FCA urges later life lending expansion

Highlights

FCA's Emad Aladhal highlights that by 2040, 51% of households aged 60+ could benefit from later life lending, tapping into £4.3 trillion in housing wealth.
Fairer Finance estimates later life lending could unlock £23 billion annually at today's prices, versus current market volumes of about 30,000 contracts for over-55s in 2025.
The FCA is consulting on retirement interest-only affordability, will hold holistic advice workshops this summer, and is conducting a focused market study on later life mortgages.

Market gaps and growth potential

As reported by the Financial Conduct Authority, retail banking director Emad Aladhal says later life lending has the potential to become a mainstream part of retirement planning, but the market is not yet ready to meet future demand at scale.

In his speech at the Later Life Lending Summit, Aladhal says more retirees are likely to face income shortfalls while holding substantial housing wealth that could support spending, care needs, home improvements or family gifting. He says Fairer Finance research suggests that by 2040, 51% of households aged 60 and over could benefit from accessing housing wealth through later life lending, with those consumers holding about £4.3 trillion in housing wealth.

The same research estimates this could unlock about £23 billion a year in today’s prices, far above the current size of the market. FCA data also shows that of almost 330,000 mortgages advanced to over-55s in 2025, only 9% were lifetime mortgages or retirement interest-only products, equivalent to about 30,000 contracts.

Aladhal says both supply and demand are holding the market back. On the supply side, current levels of engagement suggest the sector may not be prepared for rising demand, while on the demand side consumers often only consider these products when under financial pressure and advisers do not always present them as part of a broader retirement plan.

Advice reform, technology and regulatory support

Aladhal says stronger product design alone will not be enough, and that funding models, consumer support and confidence in advice must also improve if the market is to expand responsibly. He says the sector should examine whether existing products and bulk annuity capital can meet future needs, while also considering alternatives such as securitisation and forward flow arrangements.

He says consumer journeys remain fragmented, with mortgages, pensions, investments and later life planning still handled in silos. The FCA wants more holistic advice that helps consumers assess all available options across their financial lives, rather than focusing narrowly on individual products.

Technology could also reshape the market, he says, pointing to AI, blockchain and data-driven tools as ways to improve engagement, sourcing, decision-making and support consistency. He adds that the sector should not wait for innovation to emerge elsewhere before adapting its own practices.

The FCA says it is consulting on retirement interest-only affordability, plans to hold workshops this summer on holistic advice, and is carrying out a focused market study on later life mortgages. Aladhal says regulation can help remove barriers, but the industry must lead if later life lending is to become a trusted, scalable part of retirement funding.

Our earlier article on Britain’s review of defined benefit pension transfer rules explained how an unusual deal prompted the government to reassess safeguards around shifting pension liabilities. We noted that officials want oversight to keep pace with innovation in pension scheme restructuring, without eliminating flexibility for legitimate transactions.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.