FCA: Later life and RIO mortgages go under the spotlight

The FCA has launched a market study of later life lending with a view to helping to make sure that the market evolves in a way that meets people’s needs.  There is recognition that a large and growing proportion of consumers may face financial difficulties in retirement if reliant on pension provision alone. There is an expectation that people may increasingly need to rely on housing wealth (through accessing equity on their properties) in later life to ensure financial security, and therefore lifetime and retirement interest only (RIO) mortgages could play a greater role.  

This market study aims to identify and evaluate features of the market for lifetime and RIO mortgages that may prevent it developing in the right way to deliver this and, where necessary, consider what change is needed to remedy them. The FCA see this as an opportunity to support the market to meet evolving consumer needs and promote effective competition in the interests of consumers. With this in mind the focus will be on two areas:

• Provider entry and growth – acknowledging that to meet consumer demand, the provider market will likely need to expand by incumbents growing and new firms entering. The FCA will explore barriers to growth and entry, prioritising areas where it is able to act to reduce these barriers. One particular area of note is stakeholder feedback that certain regulatory rules or standards may deter firms from entering the market, including standard mortgage lenders who may wish to offer lifetime or RIO products. The FCA intend to build on this feedback to its Mortgage Rule Review by understanding the provider market greater depth and, in this light, consider the merits of further rule change.  Separately from this market study the FCA is also reviewing its RIO affordability assessments guidance, which stakeholders have commented is a significant barrier to entering the market
• Effective consumer decision-making (including changing their mind if their circumstances change or they realise they have made a decision that is not right for them).  The FCA want to look broadly at what shapes consumers’ understanding and influences their decisions. This will involve examining the role of intermediaries, publicly available information, and other guidance and tools that consumers use. This will include the potential role of more holistic advice (this will no doubt be particularly important given the difficulty for consumers in obtaining information about the range of options available to them for financing their retirement, including different mortgage products, and the potential difficulty in understanding and comparing several complex options). The FCA will also need to explore consumers’ engagement with these mortgages after initial purchase and their ability to exit these products (as opposed to these becoming a “one and done” solution).  There will be lessons to be learned from equivalent international markets too – for example in some other jurisdictions, products akin to lifetime mortgages (often called ‘reverse mortgages’) can operate more like standard mortgages in that consumers can and do switch, either with their existing lender or to another provider, with both variable and fixed rates common.

Whilst lifetime and RIO mortgages will be the primary focus of the market study, the FCA will also consider other means of accessing housing wealth in the context of how consumers understand and compare their options. This includes downsizing as an important alternative, and also standard mortgages (albeit acknowledging that this may only be a viable option for some) and home reversion plans.

Next steps

The FCA is keen to note that they do not yet know what shape their output will take, and likely consequences.  They are very much beginning the market study with an open mind and it may well reach the conclusion that without any intervention the market can and, driven by effective competition, is likely to develop to meet anticipated demand in a way that fully supports consumers’ decision-making and delivers positive outcomes. Alternatively, it may be the case that change is needed – possibly significant reform – in which case the focus will be on getting the right long term solutions, prioritising solutions that support competition and innovation, and enable consumers to easily access products and services which meet their needs and provide fair value. Remedies could include: making, removing, or amending rules; publishing guidance; proposing greater industry self-regulation; supervisory action or engagement within the current rules framework; introducing firm-specific remedies or taking enforcement action under FSMA or the Competition Act 1998; making recommendations to government or another authority to take further action. Potential remedies will be considered alongside any consultation proposals published in the course of the Mortgage Rule Review, following the roadmap set out in FS25/6

The FCA’s aim is to provide certainty to industry on its findings as soon as possible, views on the scope of the market study and the issues explored are welcomed by 17 April 2026.  Following completion of the market study, the FCA expect to publish an update by the end of 2026.

You can find the FCA's market study terms of reference here

Its dedicated webpage is here