Regulator says sector must overhaul products, advice, and consumer engagement or risk losing control of its own future
The Financial Conduct Authority (FCA) has warned that the later life lending market is not positioned to meet the scale of demand that demographic pressures and a widening retirement income gap will generate, urging industry leaders to act decisively or risk others shaping the sector's direction.
Speaking at the Later Life Lending Summit on 16 June 2026, Emad Aladhal, director of retail banking at the FCA, said the market faced structural weaknesses on both the supply and demand side that left it ill-equipped for what he described as an inevitable and growing consumer need.
"There is an increasing generational and social need to provide greater funding in retirement," Aladhal said. "There is real opportunity to respond to this future demand by developing products people need, improving access to advice, and building trust."
A market falling short
FCA data illustrate the gap between potential and current activity. Of nearly 330,000 mortgages advanced to borrowers over 55 in 2025, only around 9% — approximately 30,000 — were lifetime mortgages or retirement interest-only products. Aladhal (pictured right) described this as reflecting failures of both supply and demand.
On the supply side, he said current market engagement levels suggested the sector was not ready to support future demand. On the demand side, he noted that consumers typically engaged only when under financial pressure, rather than treating housing wealth as part of proactive, long-term retirement planning.
"Unless the market adapts, it will miss both the opportunity to grow the market demand and fail to meet genuine consumer need," Aladhal said.
The scale of unmet need
Aladhal set the market's current performance against a backdrop of significant and growing retirement funding pressures. Research from the Pensions Commission found that 15 million working-age adults in the UK will not achieve the retirement income they aspire to.
Yet research from Fairer Finance estimates that by 2040, 51% of households aged 60 and over could benefit from accessing their housing wealth through later life lending. That cohort is projected to hold approximately £4.3 trillion in housing wealth, with potential annual unlocking estimated at around £23 billion in today's prices — a figure many times larger than the current market.
Aladhal argued that housing wealth should be considered alongside pensions, SIPPs, and ISAs as a fourth pillar of retirement funding, and that the sector had an obligation — and an opportunity — to make that case to consumers.
Fragmented advice compounding the problem
Aladhal also criticised the siloed structure of financial advice, in which mortgage, pension, investment, and later life specialists rarely worked together to serve a consumer's full financial picture. He said advisers frequently failed to consider the complete range of options available to clients approaching or in retirement.
"We want to see advice that supports informed, confident decision-making across all available options," he said. "That means advisers looking across the whole consumer journey, not just part of the market. It means moving from product-led conversations to genuinely holistic ones."
He acknowledged referral models as a step forward but said they should be a starting point rather than a destination.
Products, funding, and technology
On product development, Aladhal said innovation should be judged not on sophistication but on whether it delivered better outcomes for consumers. He questioned whether the current product baseline remained appropriate for a future cohort with diverse needs and varying levels of wealth.
He also raised the question of funding, noting that bulk annuity capital was likely to remain dominant unless alternative models — including securitisation and forward flow arrangements — were actively pursued. On technology, he pointed to AI and data-driven tools as having potential to support earlier consumer engagement and improve consistency across the market.
FCA steps and industry challenge
Aladhal set out several regulatory actions already under way. The FCA is consulting on retirement interest-only affordability, is planning workshops this summer on holistic advice, and is conducting a focused market study on the later life mortgage sector to assess whether competition and consumer outcomes require further intervention.
He was clear, however, that regulation alone could not close the gap — and issued a direct challenge to the industry.
"The FCA will do its part to foster good outcomes for consumers and the appropriate growth of this market to meet future needs," Aladhal said. "But you need to step forward. Because if you don't, I expect others will step in to define that future."
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