"A simple 'hand off' will no longer be appropriate"
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, according to a report from Key Partnerships, the equity release referral service arm at Key Group.
Research for the report showed that nearly six out of 10, or 57%, of 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. Less than a quarter, or 22%, think 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.
Jason Ruse (pictured), business development director at Key Partnerships, said that 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,” Ruse pointed out.
“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.”
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 also showed.
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