Early regulatory ‘forays’ into the sector leaned heavily on this approach to the equity release market. A determination that advisers should be specialists, dabblers need not apply, and that this was an advice sector unique unto itself.
But times change and we have moved swiftly away from a point in time where we should simply be referring to the equity release sector as somehow standalone.
There are very good reasons for this, not least the fact that later life lending product solutions grew in number, and these were (and are) not just solutions which focus on the release of equity from a homeowner’s property.
We’ve seen mainstream lenders upping their maximum age for lending, plus we had the introduction of RIOs, and it is inevitable that we will see more hybrid-type products which merge the mainstream and the equity release sector over time. It was a fundamental shift in the options available to older homeowners and it requires a shift from advisers as well.
Equity release specialists in danger
At a recent ‘Breakfast with Stuart’ meeting, I was asked if it is still possible to purely be an ‘equity release specialist’ in our sector, and I think many firms could struggle as an adviser to maintain such a focused approach in the current age.
That view is predicated on the above. That later life lending options available to borrowers now extend beyond lifetime mortgages/equity release, and that you might be swimming in somewhat murky advisory waters if you turn away a customer simply because their wants and needs are more aligned with a non-lifetime mortgage product.
Consumer Duty, of course, figures heavily in this advisory context and is certainly something to be aware of. There is a fundamental need to provide a positive outcome for the client and that positive outcome may not be the recommendation of a lifetime mortgage.
At Air, we’ve been working to highlight the challenges this presents for advisers who might traditionally have only opted to work – and advise – in the lifetime mortgage space, and what they might need in the future in terms of squaring a sector circle which requires them to ascertain what later life product a client might be best suited for. Especially if it’s not a lifetime mortgage.
You may have read the recent interview on this very website with Air’s CEO, Paul Glynn, here, which outlined the solutions we are currently working on in this space for advisers.
Technology is the key
As is often the case, it is technology that can come to the aid of advisers with such conundrums to work through, particularly in terms of making it easier for advisers to identify the products which might be suitable for those clients. We recently launched our ‘Navigator’ tool which is focused on using top level affordability considerations to narrow down the range of potential products suitable for that client, and secondly, helping them easily compare borrowing costs across lifetime mortgages (both with repayments and no repayments), residential mortgages and RIOs.
Understandably, there might be a nervousness amongst those advisers who do count themselves as specialist in this sector, particularly if all they have done is focus on lifetime mortgages. But it’s important that we develop as the sector develops.
This is no longer an equity release market, but a later life lending one. The options available have broadened, and will continue to do so, and the important point is that advisers are able to provide all those options to clients.
Certainly, from a regulatory point of view, there will be a Consumer Duty-focused expectation that advisers are delivering this for the client. We’ll continue to look at all the ways and means by which we can ensure you have the best chance possible of delivering for all.
