With the imminent introduction of the new Consumer Duty regulations on 31st July, what are the likely implications, challenges and opportunities that lie ahead for all of those working with and advising later life clients? In this first of a three-part series of articles, we take a look at what the latest research in this area tells us about the need for an effective and compliant referral strategy.

Despite some misguided assumptions that the Consumer Duty regulations are little more than a refreshment of existing ‘Treating Customers Fairly’ rules, the new provisions actually contain far-reaching and brand new requirements that will impact not only the way products are manufactured and distributed, but also how advice firms communicate with customers and define their propositions.

The Consumer Duty requires firms to deliver good outcomes for the client with a particular focus on products, price and value, consumer understanding and consumer support. There is also a series of ‘cross-cutting’ rules including a requirement for advice firms to avoid causing foreseeable harm to clients – and while the regulator does not expect advisers to have a crystal ball, the avoidance of foreseeable harm means there is a requirement on advice firms to consider the possible impact on client outcomes following significant changes to their personal circumstances or wider financial events.

In practical terms, this means thinking about how the advice and product recommendations made today might need to adapt and change in the future. And if that means considering product options that you currently are not qualified to advise on, then advice firms should have formalised referral structures in place. Given the gravity of the new regulations, it is unlikely that simple, informal ‘hand off’ arrangements will be seen as appropriate.

Latest research conducted by Key Partnerships suggests that many firms with existing introducer relationships are gearing up to make changes ahead of the new regulations, with our Introducing the Introducers report showing nearly six out of 10 (57%) believe they need to make changes to processes to be up to standard for the new rules which start to take effect from July.

Around 7% of firms questioned believe they need to make significant changes while 12% believe they need to make moderate changes. Around 38% acknowledge they will have to make a few changes.

Worryingly, around one in six (16%) said they don’t know what changes will need to be made.

With client circumstances and needs likely to evolve considerably throughout retirement, advice firms dealing with later life clients should consider whether a referral relationship with a specialist could help not only with avoiding foreseeable harm but also provide an income boost to their business.

Around a third (32%) of introducers questioned for the report said they would advise similar firms to themselves who are not referring clients to equity release specialists to consider doing so.

How Key Partnerships can help

We provide a robust referral process to help you broaden your advice proposition without compliance responsibility. 

Key Partnerships work with specialist equity release advisers from The Equity Release Experts. Our whole-of-market advisers have their fingers on the pulse to help find clients a solution to meet their needs.

Alongside supporting your clients, for every case that completes, you could also add a valuable income stream to your business. In 2022, the average Key Partnerships referral fee paid on each completed case was £2,252*.