Standard Life is preparing to enter the equity release market and has teamed up with Key to develop a range of Standard Life branded products.
The insurer, which is now part of the Phoenix Group, has plans to launch its own products but in the meantime will rely on Key to deliver the products under the brand Standard Life Home Finance.
Standard Life's parent Phoenix has been funding lifetime mortgage products through Key and LV since 2016.
But today (September 14) marks the beginning of Phoenix’s wider strategy to “get more ownership” of its products “in the near future”, Tom Ground, managing director of retirement solutions for the Standard Life brand, told FTAdviser.
There is an “active plan to invest in technology and processes to own these products” fully, according to Ground.
“We do have timelines in place,” he added, unable to commit to exact timings of when Phoenix will own its equity release products end-to-end. He did say: “They’re in reasonably short order”.
The new product range, details of which are set to be released over the next two weeks, will gradually roll out to advisers from October. They will include lump sum and drawdown offerings.
Phoenix, which serves some 14m customers, aims for the mortgage products to be “readily available to all advisers by the end of this year”.
Ground said there were a number of “subtle differences” with these products, compared to the ones it was - and still is - funding for Key Group through the More2life brand.
He said the firm has sought to minimise early repayment charges. “We’re trying to be crisp and clean about the charges.”
“We think it’s a really useful product,” said Ground. “Accessing equity in the house is increasingly going to be a way to sustain retirement.”
Ground called Phoenix’s lifetime mortgage range “a key enabler” for the growth of its annuity business, which did £1.4bn in bulk annuities in the first half of this year, and is also increasingly going to be marketed under the Standard Life brand.
Phoenix plans to up the volume, as well as expand, this side of the business - a market it entered less than three years ago.
“The core strategy is to expand this,” said Ground. “There are £2trn worth of liabilities in the defined benefit market. There’s a really big opportunity to help DB pension scheme holders secure the pensions they've been promised.
“It’s grown quite quickly, and this arm of the business will increasingly be Standard Life branded too.”
Currently, some of these legacy products are Phoenix and some are ReAssure-branded.
This month, Phoenix acquired a part of Just Group’s LTM portfolio for £300m. This added to June 2021 figures, which said about a third of its £10.7bn diversified illiquid asset portfolio comprised equity release mortgages.
Ground said Just’s portfolio was “all performing mortgages”. “It’s a very clean book, we did lots of due diligence.”
With acquired portfolios, self-funded third-party products, and now its own products, Phoenix has significantly diversified its mortgage books.
“Over time, we’ve been trying to work out the best route of expanding the market,” said Ground. “We’re reasonably ambivalent to which channel to see through. But we’re hoping Standard Life will become the prevalent model.”
ruby.hinchliffe@ft.com
