Equity release specialist Key Retirement Solutions (KRS) aims to pull additional entrants into the burgeoning market by establishing a high-volume distribution channel for lenders.
KRS has set up a referral service for IFAs who do not have a specialist knowledge to deal with their clients’ equity release needs.
The Key Partnership initiative will provide IFAs with an online facility for obtaining quotations and tracking cases, back-office support and a helpline for referrals and queries.
Dean Murfin, business development director for KRS, said lenders were unwilling to enter the market until a clear distribution channel was available to move large quantities of product.
He said: ‘We want more product providers to give better choice, and better interest rates through more competition. If we sort out the distribution, then lenders will come to the market on their own.’
Murfin said KRS had seen interest in the scheme from around 70 IFAs. IFAs will be paid a fee for each referral, but the client will still belong to them for other advisory requirements. KRS will simply provide the client with advice on equity release products.
All the lenders used will be members of Safe Home Income Plans (SHIP), and Murfin said he expected the body to have added two or three members to its panel by the end of the year, although he would not divulge company names.
The equity release market is currently worth around £750m, with KRS predicting it could rise to over £7bn within the next 10 years. £313m has been released through equity release schemes in the first six months of this year, an increase of 33% on the same time last year.
Jon King, chairman of SHIP agreed the expanding market would attract further players.
He said: ‘There are a number of product providers we hope to announce as new members in the coming months.’ But he would not be drawn on numbers.
However, as lenders compete for market share, Rob Clifford, managing director of mortgageforce, said: ‘I do not expect 100 lenders to rush in, but with so much clawing for market share, if equity release is successful more will join that happy band.’
l Stroud & Swindon has become the first building society to gain membership to SHIP.
Ashley Shepherd, senior manager, marketing services at Stroud & Swindon, said: ‘ There is a growing market for products which enable the elderly to unlock cash from the increasing value of their homes.’