Government deputy chief whip Lord Dick Newby says lenders are acting against the “spirit” of the mortgage market review.
Speaking in the House of Lords earlier this week, the Liberal Democrat peer says he hopes the FCA will review how lenders are treating older borrowers after the MMR.
In a debate on bridging loans this week, peers questioned why lenders were making it difficult for older borrowers to get loans.
Older borrowers have seen age limits raised in recent years and experts warn the MMR and pensions freedoms next year will make it more difficult.
Lord Newby said: “Many lenders appear to be approaching the rules in a way that is against the spirit set out by the FCA. The FCA is reviewing the way the MMR rules operate, and I hope there will be some movement there.
“A number of banks and smaller building societies, in particular the Family Building Society and the Bath Building Society, of course do not have any age limits in their lending policies.”
Conservative peer Lord Howard Flight said: “Other than a few of the more enlightened ones, banks are now refusing to provide mortgage loans to anyone over 70. It is very well to say that banks can exercise discretion here, but when they are told by the regulator that is what the regulator wants, not surprisingly they want to protect themselves, so they say, ’well, we’ll do what we’re told’.
“If they do otherwise, they put themselves out on a limb if something goes wrong. Basically, the regulator needs to be advised to make it clearer that it wants to see banks use their initiative.”