Equity release referral relationships will be boosted by new Consumer Duty rules, which will drive customer service standards, says a report from Key Partnerships.
But the survey finds that 57% of introducers say they still need to make changes to processes to be up to standard for the Financial Conduct Authority rules, which comes into force in July.
The new standards require “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”, says the equity release referral service arm’s report, Introducing the Introducers.
The FCA says its new rules seek to enforce “higher and clearer standards of consumer protection across financial services”.
They will cover the whole of the UK’s 60,000 regulated financial firms, including the mortgage industry’s roughly 100 lenders and 18,000 brokers and broker firms.
Key Partnerships’ report says around 7% of the firms it questioned say they still 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 need to be made.
The report points out that 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.
It finds that 32% of introducers say they would advise similar firms to themselves who are not referring clients to equity release specialists to consider doing so. A further 11% say offering a service is a good additional income stream.
Key Partnerships business development director Jason Ruse says: “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 rules 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 £6.3bn 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.”
Key Partnerships says more than 850 introducers have provided their feedback to a set of questions since 2019 and over 9,000 of its records were reviewed to identify introducer subsets. Data on the equity release market is drawn from Key’s third quarter 2022 Market Monitor.
