FCA Urges Financial Industry to Develop Later Life Lending as Fourth Retirement Pillar

The UK Financial Conduct Authority (FCA) has urged the financial services industry to reshape later life lending into a recognized fourth pillar of retirement planning, sitting alongside state, workplace, and personal pensions. Speaking at the Later Life Lending Summit, Emad Aladhal, Director of Retail Banking at the FCA, warned that millions of consumers are approaching retirement with significant income shortfalls. Citing Pensions Commission findings, Aladhal highlighted that roughly 15 million working-age adults will fail to reach their expected retirement income. At the same time, older consumers hold substantial housing equity, with Fairer Finance estimating that households aged 60 and over will hold £4.3 trillion in property wealth by 2040. Despite this potential, the regulator noted that the market remains underdeveloped. Of nearly 330,000 mortgages advanced to individuals over 55 in 2025, only 9%—around 30,000 contracts—consisted of lifetime mortgages or retirement interest-only (RIO) products. Aladhal pointed out that consumers often view later life lending only as an option of last resort when under financial strain, rather than integrating housing wealth into long-term financial planning. The regulator identified fragmented advice and siloed product distribution as major barriers to better consumer outcomes. Mortgage, pension, and investment advisers frequently operate separately, preventing consumers from receiving comprehensive guidance on using their total asset base. Aladhal challenged the industry to break down these silos and move toward holistic advice models, supplemented by safe adoption of technology and data-driven tools. To support the sector's development while protecting consumers, the FCA is undertaking several regulatory initiatives. The watchdog is actively consulting on retirement interest-only affordability rules to facilitate appropriate access. In addition, the regulator is conducting a dedicated market study into the later life mortgage sector to evaluate how products are funded, how mainstream and specialist options interact, and whether regulatory barriers are hindering competition. The FCA will also host industry workshops to explore solutions for holistic advice delivery, stressing that product innovation, diversified funding models—such as securitization and forward-flow arrangements—and transparent consumer journeys are critical to scaling the market responsibly.