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The introduction of the FCA’s Consumer Duty rules will drive more specialist equity release referral relationships as the market has to step up to meet new standards, a new report from Key Partnerships, the equity release referral service arm at Key Groupsays.
Its Introducing the Introducers Report argues the new provision requiring firms to deliver good outcomes for the client with a focus on products, price and value, consumer understanding and consumer support will mean simple informal ‘hand offs’ will no longer be appropriate.
Research for the report shows nearly six out of 10 (57%) introducers believe they need to make changes to processes to be up to standard for the new rules which start to take effect from July this year.
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.
Just 22% say they do not need to make any changes as they are already fully compliant while 16% don’t know what changes will need to be made. The introducer market: Key Partnerships’ report highlights how the introducer market differs from the wider market and underlines the opportunities for potential introducers expanding their services. Referral customers typically release more property wealth on average than the wider market at £133,048 compared to £114,354 with some introducers such as accountants recording average amounts of £183,334, the report shows.
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. Around 30% said similar firms should speak to the experts on equity release.
Around 7% said offering a referral service is a great way to see if clients are interested and 8% noted that clients are more interested than firms might think. A further 11% said offering a service is a good additional income stream while 17% said similar firms should consider if equity release could help their clients if they are unable to do so. All Jason Ruse, Business Development Director at Key Partnerships said: “While some organisations already have successful referral relationships in place, others have taken a more informal approach or been unable to support customers at all. Under Consumer Duty with the requirement to focus on good customer outcomes, a simple hand off will no longer be appropriate so we anticipate that we will see increased interest from a range of organisations.
“Businesses which need to comply with Consumer Duty will not be alone in looking to build referral relationships as more and more older customers consider the role that housing equity can play in their later life finances. We saw a record £6.3 billion released in 2022 by people seeking to manage debt, support families and boost their retirement income as the cost-of-living crisis continues to bite.”
There is a wealth of information online for customers to educate themselves on how they can help their clients with their later life finances. www.keypartnerships.co.uk
