Key Retirement puts advice plan on ice

Key Retirement puts advice plan on ice

Key Retirement has puts its plans to buy an advice business on ice as it awaits the outcome of the Financial Advice Market Review.

The firm’s business development director Will Hale said attempts to expand into the advice market had been put on hold shortly before Christmas, because it proved “difficult to meet the financial objectives” of that business.

In August, Key Retirement announced it had set aside £10m to expand across London and the south east through an “accelerated acquisition strategy”, but Mr Hale said those plans were being scaled back somewhat.

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He said: “There seems to be a large amount of dislocation in the market. Customers are confused about what to do and they were coming to us for help or information but very few were at a stage where they were prepared to commit to a financial product.

“We have reverted to making that part of the business an annuity broking operation, but depending on the results of the Financial Advice Market Review we would like to re-enter that space when the time is right.

“The retirement planning and advice market is one we will keep a close eye on, but we will only look to invest once the landscape has been clarified.”

HM Treasury and the Financial Conduct Authority launched the Financial Advice Market Review last year to look into ways to bring financial advice back to the mass market.

As part of the review, for the first time in a decade, the regulator confirmed it will reconsider the unlimited liabilities advisers now face.

The review has acknowledged there are relatively few awards by the Financial Ombudsman Service made against financial advisers in response to complaints about incidents longer ago than 15 years (which would be likely to be barred if a long-stop were in place).

Last year, Key Retirement expanded its retirement lending division with the acquisition of V Loans, a specialist second-charge broker.

Over the course of 2014 the provider generated earnings before interest, tax, depreciation and amortisation of £7m and now employs 310 people.

Meanwhile, earlier this month analysis by Key Retirement showed pensioners withdrew £4.7m a day from their homes during 2015.

Mr Hale commented equity release is often seen as a product of last resort, but intermediary partners are bringing in business of a different type: customers who have higher value houses and see it as part of a holistic financial plan.

He said: “Advisers need to take an active decision. Do they advise about equity release or do they refer their business to someone like us?”