According to Key Partnerships, the equity release referral service arm at Key Group, over half (57 per cent) said that they expected equity release side of their business to grow over the next three to five years.
The report is based on analysis of over 9,000 partner records and research with introducers.
The firm said that Consumer Duty could encourage more to consider how they offer equity release products or how they can “build strong specialist referral relationships rather than more informal hand offs”.
Around 88 per cent of those surveyed said that they maintained some referral relationship, and 45 per cent just referring and 43 per cent said they provided some advice in-house.
Mortgage brokers biggest source of referrals
The report found that lawyers and legal services firms were referring equity release customers more often, consisting of six per cent of introductions this year. This is up from one per cent last year.
The main source of referrals was mortgage brokers, accounting for 64 per cent of introducers. This was followed by financial advisers at 11 per cent and wealth managers at nine per cent.
The report noted that referral customers release more money than the wider market at £133,048 compared to £114,354 in the wider market.
Customers referred by accountants released the most at £183,334, followed by £161,313 released customers referred from wealth managers and £117,414 from clients referred by IFAs. Those referred by lawyers release an average of £166,987.
Over third saw the benefit from referral relationship
Around 39 per cent of introducers said they benefitted from setting up a referral relationship for equity release as it allowed them to help clients with issues that they could not deal with previously.
Over a third (36 per cent) said that it enabled them to offer a wide range of services.
Client demand was the most significant factor in choosing to refer, with 30 per cent saying it was interest from clients which convinced them to set up a referral relationship.
Around 21 per cent said they preferred to refer as equity release requires specialist knowledge and 22 per cent stated that their head office or network prefers equity release cases to be referred.
Jason Ruse, business development director at Key Partnerships said that while mortgage brokers were the largest introducer group, the stamp duty holiday and recent market upheaval meant they “very focused on ‘business as usual’ rather than exploring partnership opportunities”.
He continued: “As we move out of a pandemic while managing these challenges, the equity release referral market has remained robust and we’ve seen modest annual growth in the number of organisations choosing to refer and a 13 per cent growth in referrals in 2022.
“However, we do anticipate that as the implications of Consumer Duty become clearer and organisations which are impacted understand the requirements, we will see significantly more interest.”
Ruse added: “Informal hand-offs will no longer be appropriate in a world that is focused on good customer outcomes and organisations will need to clearly show how they are supporting their clients.
“Against the backdrop of the current economic uncertainty when more customers are looking to housing equity for support, it is perhaps unsurprising that our introducers anticipate that this area of their business will grow over the next few years.”
