Key Later Life Finance laid off 13 per cent of its workforce earlier this year, with the equity release provider saying last year’s “mini” Budget was to blame.
Speaking to FTAdviser last week, Key’s chief executive Will Hale said the final quarter of last year was a challenging one and as a result the firm had to reevaluate the size of its business to ensure it is “appropriately sized for the market as it is today”.
As a result 13 per cent of the firm’s 220 employees across a number of departments were made redundant in the first week of March.
Commenting on the redundancies, Hale noted that the company expanded its headcount during the first half of 2022 following an increase in demand for later-life lending products.
“However, following the disastrous ‘mini’ Budget, we saw a sudden increase in rates and a contraction of loan-to-values that saw lower lending volumes – although demand remained strong.
“Unfortunately, this meant that we had to make 13 per cent of colleagues redundant as part of a process that completed in the first week of March and encompassed a range of departments,” Hale said.
He added: “We do expect H2 to be more buoyant but it is likely to be below the peaks that we saw in 2022 so we had to align our headcount to business volumes. Overall, the outlook for the later life lending sector – and for advisers such as Key – remains positive and we will continue to focus on supporting clients, customers and colleagues.”
During the pandemic, Key did not lay-off any of its staff and did not avail of any government support.
It is not the first equity release provider to cut its staffing numbers as a result of the "mini" Budget.
Earlier this year Leeds-based advice firm Age Partnership cut nearly 10 per cent of its staff, citing the former prime minister Liz Truss's "mini" Budget as the cause.
In the months immediately after the “mini” Budget, product choice in the sector shrunk as interest rates rose sharply and lenders had difficulty pricing products.
Since then, the market has begun to rebound with providers reporting an uptick in activity this year. However, loan-to-values still remain far below were they were pre-September last year and the cost of releasing equity from a home remains higher.
Looking to the year ahead, Key’s Hale said although Q1 has been a challenge in terms of business completed, he believes the firm is in a good place.
“Relative to our competitors we’re in a very good position, we will look to continue growing through advertising and working with other intermediaries to make sure equity release is more front of mind,” Hale said.
In his view, the equity release sector “still has a massive role to play in years to come” and he noted that it may be a time for consolidation in the sector.
However, while he said Key is always looking at opportunities to grow, it has nothing specific in the pipeline at the moment.
jane.matthews@ft.com
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