Master Later Life Lending - By Air
The "Master Later Life Lending" podcast is designed specifically for equity release specialists and mainstream mortgage advisors who serve clients over the age of 50. Hosted by industry veteran Paul Glynn, our mission is to equip you with the knowledge and tools needed to excel in the dynamic world of later life lending.
Each episode features in-depth discussions with leading experts, focusing on the unique financial needs of older borrowers. We tackle key issues such as dispelling myths around equity release, exploring the latest product innovations, and understanding the regulatory changes that impact your practice.
Our goal is to empower you to provide the best advice and solutions to your clients, whether they are traditional equity release customers or emerging younger later life borrowers. By staying ahead of market trends and enhancing your expertise, you can build trust with your clients and grow your advisory practice.
Join us on this journey to mastering later life lending, and ensure you’re equipped to meet the evolving needs of your clients. Subscribe now to stay informed, inspired, and ahead in this crucial segment of financial services.
Master Later Life Lending - By Air
Peter Maddern: Unlocking property wealth with flexibility
In this Comprehensive conversation, our CEO Will Hale sits down with Peter Maddern, Director of Mortgage Sales at Canada Life, this episode explores how a human-led approach is transforming later life lending, highlights the role of flexibility in underwriting, and demonstrates how advisers can unlock new opportunities for clients.
So welcome to the next in our series of comprehensive conversations where I'm joined by Canada Life's Peter Madden. We're at Silverton today, so please excuse the noise. We're track tied, we've got F3 cars racing around. So uh enjoy the atmosphere and hopefully it won't detract from Peter's uh comments. Peter, welcome.
SPEAKER_00:Thanks, Bill.
SPEAKER_01:Lovely to have you here. Great to be here. So I've got a few questions for you today, but I was going to start off. Excuse me for saying so, but you're a bit of a new face for all of us in the later life lending market. So to kick off, why don't you introduce yourself, tell us a little bit about your background, and tell us about I suppose your objectives and your new role in in terms of Canada Life.
SPEAKER_00:Yeah. So I've been with Canada Life nearly 19 years now. Uh I started in the in the corporate actuaria world, spent the first sort of 10 years in there, ALM, capital management, all that all that good stuff. But um, about after that 10 years, I really pushed to move into the commercial areas of the business. And since then I've been moving around proposition, development, pricing, strategy, commercial development across a number of our product ranges that we have at Canada Life. So uh covering our pensions and drawdown business, uh our international bomb business, as well as more recently our bulk annuity business. And then I took on this role at the start of the year, uh managing director of the retirement business. So I look after both our individual annuity and our equity release business.
SPEAKER_01:So as you say, I mean Canada Life, big global brand, uh sort of lots of different product position uh propositions, but but in terms of later life lending and equity release, what's the strategic importance of that for the group?
SPEAKER_00:Yeah, uh really, really important. I can see it. Yeah, there's sort of two key themes for us. One, there's a customer angle. Yeah. Now we want to be where there's a customer need and we can support customers and later life lending, I think, easily ticks that box. There's an unmet need there, undersaved customers, property wealth, put the uh put an XT release mortgage for that, and you they can start to support themselves and for the retirements that they want. We've also got from the product angle, um, it's actually it actually acts as a very natural hedge for us between individual annuities, which do very well when interest rates are high, and x to release mortgages that do well when interest rates are low, and we're able to then you know move resources, move people. So actually it it it it's sort of a nice diversifier from a product perspective. And then and then finally, we as you say, we're a big global group, not we're not just in the UK, we've got a big Canadian US um uh operation, and we we through that we source a lot of long dated liabilities, in particular, say in the UK with our bulk annuities, yeah, very long liabilities, and we need to therefore be a long-term investor in the UK. Equity release mortgages ticks that box really nicely. It's a great asset for us, um, not only in the UK, actually, but also we've seen uh our Canadian balance sheet has funded around a billion of equity release mortgages. So we you know we we really see both that customer, the product diversification, and that and that funding angle as as important for us.
SPEAKER_01:I think it's really useful actually for our members to understand that that funding angle and the importance of it as an asset class. But I think you know, for my next question, I'd like to sort of focus maybe on the customer side, as you talked about, because you know, we've seen some, I think, great moot music uh coming from the regulator in terms of housing equity and its importance, not just in helping customers fund their retirement, but also in terms of the societal benefit it can it can bring. And then we had that recent Fairer Finance report from the Equity of East Catal, which just sort of painted the picture about the opportunity but but also some of the barriers. And again, relating back to one of your previous answers, I was going to talk to you about sort of how you see the market collaborating better because, as you say, Canada Life is sort of very involved in the pensions and investment world, and housing equity has always been sort of sidelined a little bit and look and looked at a sort of different um sort of different business dream. So I just wonder how you see the market coming together so that housing equity is a more integrated part of retirement planning.
SPEAKER_00:Yeah, I think if I think about those pension advisers first, I've sort of sort of already touched uh touched on it, but when there isn't sufficient pension there, when you're looking and how you're gonna create the income that's needed through retirement, when there is a shortfall, I it's so sensible to go and have that conversation about the property and then the the desires around that, obviously bringing inheritance in, but that feels like a that should be meet and drink of the industry, if you like. But but interestingly, we also get into a lot of conversations with wealth advisors through our international bond. So that is customers who are really quite wealthy, and what the their challenges are different. They're looking at how do they manage their inheritance tax in the best possible way. And and again, actually, in the right scenarios, you should be looking at how do you use that property, how do we use that for gifting, an equity release mortgage might be the right answer there. There's we we've done a few examples where borrowing from equity release to then pass on to the next generation to fund a house purchase can actually bring down the overall borrowing for that further on buying. So again, it it's one that you really shouldn't be dismissing until you at least had had a look at those. I think for equity release advisors, I think having those conversations with uh as potential introducers or new new partnerships is is one well worth exploring. Definitely trying to get into that mindset of don't just ignore the property.
SPEAKER_01:Yeah, I I mean I've seen some fantastic presentations from your sales teams around the IHT angle. Um there was a presentation done at our air masterclass, which which viewers can can find online as well, which gives some fantastic case studies that they can use, maybe as you say, with introducer partners. So I very much see that as a big part of the future of the market. Trying to bring you know those wealth managers and generalist IFAs into the market, even if they're not advising themselves, being able to work with specialist equity release advisors to get customers to the right solution. So it's fantastic to hear about that. So IHT is definitely one angle I think Canada Life sort of differentiates on. But but another that we hear about regularly from our members is is your approach to underwriting. Um, quite often Canada Life is seen as the place to go with complex properties or large cases. So talk a little bit about that. Is that a is that a sort of um a predetermined strategy or is it something that sort of just happens to align with sort of where your products are?
SPEAKER_00:Um I I would say it's probably closer to a strategy. We um it's been a sort of a hallmark of what was Stonehaven, is now now kind of life, as as sort of a lending underwriting criteria that we're flexible, we're trying to meet customer and advisor needs, and we're trying to put a human into the decision-making process as much as we possibly can. We we always we're trying to steer away from the computer says no, we want to be open and flexible and actually consider each property on its merit. We've got a team of eight underwriters, they're available on the phone, they're available to have conversations with advisors. So if you're if if advisors are struggling with a particular case, give us a call and we'll we'll see what we can do. Some of the things that we've we've looked at, we've had uh houses with 100% flat roof. I think a lot would just give that a no. Absolutely, yeah. But we've looked at that, we looked at the quality of the construction, the guarantees, the overall uh assessment of the property, and been able to lend against that. Yeah. Similarly, on a grade two listed building, again, a lot would just say computer says no. Again, we've looked at the individual property, the area it's in, the desirability of it, how well it's maintained, that they can get insurances without any um you know, uh, you know, without any loadings. Yeah. And again, got comfortable that this is a good property, one that we're comfortable to lend with, and we work with our lenders to, you know, when when a lender comes, sorry, a funder comes on board with us, that that's sort of part of the package, that that's that's our our strategy to market.
SPEAKER_01:And I I've seen similar around proximity to commercial premises as well. I think we've seen cases being placed with Canada Life where others would would not look at it. So that that flexibility is definitely definitely recognised. So and as air, we run an inquiry service for for advisors. So when they've got complex cases, they can come to us and talk to our team and you know, QDOS for Canada Life. You know, your underwriters are always the quickest to respond, and yeah, you know, get probably the most engaged in terms of trying to find a way to do that. I think that's so important for advisors at the moment. Our members are talking about the increased complexity of cases in the market. Yeah, there's a lot of uh customers who've maybe inquired previously and haven't managed to find an outcome and are coming back into the market. So the more we can help advisors find a home for those, the better, I think. So yeah. So thank you for for on behalf of their members for all the help you've given them in terms of those large complex cases. I really appreciate it. So moving on, we touched a little bit around how the mood music from the regulator is changing in a positive way towards later life lending. If I was to ask you around what you would like to see specifically from the regulator or maybe government or even our own trade bodies in terms of support of the market, what what are the one or two things that you would really like to see from them?
SPEAKER_00:Yeah, I said oh you mentioned a fairer finance report. I think that puts out there the opportunity, but also goes uh well into the the barriers that exist. I think I think you've you've spoken about it often, but it's that those silos of monks' advice, yes, we and and how you hand off between advice and how you get wealth advisor, pension advisors thinking, or widely mortgage advisors thinking about the later life. I I think that's where we would really like to see more more thought, more innovation, um, where possible changes, etc. As you you've already touched on though, it feels like we're we're pushing against an open door, at least with the with the SCA um and what they're talking about. They've got their discussion paper coming out soon. We will definitely be engaging and putting in a response to that, and I would encourage everyone to be doing the same.
SPEAKER_01:I think that's really important. I I think we haven't, as a sector, engaged actively enough. So again, you know, we are happy to be a sort of voice for for air members, but feed you know, we would encourage members to feed into us so that we can represent those views either directly with the regulator or through the ERC or other trade bodies. But I think it's a moment-in-time opportunity actually for the industries with this consultation. So we mustn't sort of uh leave that prize on the table. Definitely, yeah. No, that's a that's a good point. So, Peter, you've been enrolled for a few months now. So the question that I ask a lot of the sort of business leaders that that I that I sort of talk to is what can AI members expect in the next sort of 12 months from from Canada Life, whether that be product innovation, changes to service proposition or or anything else?
SPEAKER_00:Yeah, I think the first thing is we want to double down on where we're strong. We've been we've been doing a review of our underwriting criteria and uh currently going through governance are a few updates that hopefully we think uh advisors will will appreciate. Uh we expect that to make that live in in early half to in early in the second half of the year.
SPEAKER_01:Okay.
SPEAKER_00:Um we've also been very much looking at interest servicing. Interest rates are higher, customers want to service interests. We know that, we know we're not there, and you can expect to see some see proposition development from us in in the second half. And then finally, we we remain committed to supporting advisors um through thought leadership, through training, support, having the people on the phone. We fully committed to that, and you can expect to see more. We'll be launching our Life 100 report, uh, the second phase of that. Um, again, just looking at that development of retirement and how that's changing, how the workplace is changing. It will give a lot of good ideas and thoughts about how you have conversations with customers and clients. So uh recommend that to everybody when it comes.
SPEAKER_01:No, definitely. I mean, I spoke to Rebecca Gladstone, I think, um about six months ago about that report, and there's some great things in there for advisors to latch onto. But just going back to that point about underwriting, because I think that that's really critical for me. So it's always, I mean, I I'm not a I'm not an actuary, I'm not an underwriter, I'm I'm a layman in many sort of respects in terms of this market, but it's always struck me as strange that there isn't a price for every property.
SPEAKER_00:Right.
SPEAKER_01:So especially for lenders that are taking the business onto their own books rather than selling it to a third-party funder or through a securitisation, you know, why can't every property be taken on board?
SPEAKER_00:I think it's it's just about ensuring the quality of the property when it comes. We need to make sure it is saleable in the future. We do need to make sure it's in a decent state of repair. Like there every every insurer will have a risk tolerance and you will find it at some point, unfortunately.
SPEAKER_01:So I think that's why we And I suppose that's the difference, isn't it, between the lifetime mortgage market and the mainstream mortgage market. Yeah, so the lifetime mortgage market, you you're effectively underwriting the property, whereas in the mainstream mortgage market, you're underwriting the individual. So, yeah, I suppose that's the difference. Yeah, I think that's right. But it is a frustration for advisors, I think. You know, they they they generate these inquiries which are costly to generate. And it'd be it's good to hear you're working on the underwriting side because I think the more properties we can take on, the better.
SPEAKER_00:Yeah, as as we already touched on, we'll always have a conversation, we'll always try our try our best to see what we can do.
SPEAKER_01:So finally, we're coming to the end of our conversation, but but I wanted to sort of um talk a little bit about our collaboration as Air and Canada Life. So how do you see us working together going forward and what role can Air play in terms of supporting Canada Life's objectives in this market?
SPEAKER_00:Yeah, I think for us, I think for this market to grow safely, we need quality advice that is customer focused, that is making sure when we talk about activities, it definitely is the right product for the customer. Um, so I think everything that AIR does around encouraging quality of conversation, level of professionalism in advisors is so critical because we want to partner with advisors who are who are doing the right thing by the customer, we want to do the right thing by the customer, that's how we will grow the market safely.
SPEAKER_01:That's good to hear. I say we've invested significantly as AIR in what we call our right route journey, which combines both sourcing, fact-find, and sort of suitability report production. So, as a piece of technology, we think sort of that that enables advisors to stay on the safer tracks when advising, but it also gives us the ability to feed back to lenders some really good quality MI so that you can be confident in the type of business that you're taking on board. And I think that technology, um, in parallel with the sort of education and competency sort of support and training we can provide, hopefully that's quite a powerful combination. So, I mean, we've always had a very good relationship with Canada Life, so very keen to sort of keep that going.
SPEAKER_00:Um I'd say as well, events like today, where we bring the industry together, as you already touched you touched on it as well. We need to work together to unlock the potential that's here for the good of customers. The more collaboration we get, the more idea sharing. One idea builds on another idea. Events like today, where we have everyone together, it are just absolutely fantastic.
SPEAKER_01:Well, thank you, Peter, and and and thank you for taking the time to join us today at Silverstone. Um, it's really good to have a new face in the industry. I think sometimes you come to these events, you see the same faces, so it's great to get some new thinking, some new blood into the market, and really looking forward to you to working with you going forward. Yeah, looking forward to working with you. Appreciate your time. So that brings us to the end of our uh latest comprehensive conversation. Thank you for watching, and please do engage with the rest of the series.