CompaniesJun 3 2016

Firing Line: Will Hale

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Mr Hale, business development director at equity release specialist Key Retirement, claims that while the safety net which ensures that customers cannot end up owing more than the value of their home is a boon for the majority, the choice of opting out of the guarantee could prove invaluable for others.

This is because the associated cost of including the guarantee is often absorbed into the proposition, resulting in inflated interest rates for customers.

He said: “I think this is an area that the industry needs to debate. I am in favour of customer choice in terms of flexibility, but only through a specialist and a robust advice process to ensure that the right products will be sold to the right customers.

“Some customers have the financial strength to be able to cope with fluctuations in house prices. In those situations, the no negative equity guarantee is perhaps a feature that they do not need, therefore it make sense to have products available where they do not have to take that.”

Historically, equity release schemes have been widely viewed as the solution of last resort because they can be an expensive and inflexible way of supplementing a lowly pensions.

But times have changed, according to Mr Hale.

Mr Hale said new entrants to the marketplace such as L&G and, more recently, OneFamily, have seen interest rates on equity release products plummet to below 5 per cent.

What is more, equity release schemes are now being heralded as a viable solution to those struggling to come up with the capital to pay off their interest-only mortgage approaching maturity.

Mr Hale said: “There may be providers that would offer people in this situation a mortgage, but if you want guarantee of tenure of the property for the rest of your life, equity release can be a solution.”

“We are finding that there are a lot of customers who have quite large properties and are of a wealthy background who want to use equity release to make a gift to children and grandchildren in life rather than in death. So they would take equity release and use it to help their grandchildren onto the property ladder or to help pay for their education.”

Key Partnerships, the referral service which provides whole-of-market solutions for advisers who are not qualified to advise on equity release, has benefited from the rapidly evolving equity release arena, according to Mr Hale.

The firm, which has notched up 7,000 registered brokers, boasts 30 per cent year-on-year growth in new enquiries and typically receives 300 of these each month. Its advisers earn, on average, £1,450 on completion of the equity release loan, he said.

Key Partnerships is part of the holding company KR Group, which also owns an annuity broker business and a specialist second-charge broker V-Loans which was acquired in late 2014.

Part of the group is comprised of retirement lending specialist more2life. This raises the question of whether a company that prides itself on offering whole-of-market solutions can truly operate with a product manufacturing arm without a conflict of interest.

Mr Hale said: “We are completely separate entities. There are very firm Chinese walls that sit between the two, and there is also a physical separation in that more2life operates in a different building.

“More2life works with Key Retirement in the same way it would work with other distributors in the market. We keep a close eye on the level of business we would give to more2life. But obviously, given the great innovative products that more2life has to offer, it is important that we can offer our customers access to those products as well.”

Key Retirement Solutions is responsible for 35 per cent of equity release loans sold in the UK, which enables the company to negotiate favourable terms for customers and more competitive fees with more2life and other industry providers for its referral partners, according to Mr Hale.

In August last year, Key Retirement announced it had set aside £10m to expand across London and the South East through an acquisition strategy focused on retirement, wealth management and investment businesses, after identifying growth potential in the sectors following pension freedoms.

However, these plans have been put on ice because clients are still getting to grips with what the newly liberated pensions landscape means for them and the uncertainty in the regulatory environment following the announcement of the Financial Advice Market Review (FAMR).

“The FAMR review process is still ongoing. Although it has now produced its initial findings, there are consultations coming on the back of it.

“We thought, ‘let’s see how the regulatory landscape changes and let’s see how the competitive landscape develops’. We are there waiting to make our move as and when those things firm up.”

WILL HALE’S CAREER LADDER

2014 - present

Business development director Key Retirement

2009 - 2014

Director of corporate partnerships, Partnership Assurance

2008 – 2009

Commercial leader – retirement & protection Europe, Genworth

2006 -2008

Head of distribution Lincoln Financial Group

2001-2006

Head of European client management UBS Warburg

1998 – 2001

Client account manager, JP Morgan