The introduction of the regulator's new consumer duty rules will drive more specialist equity release referral relationships, according to a new report from Key Partnerships.
The research, called Introducing the Introducers Report, found that nearly six out of 10 (57 per cent) introducers believe they need to make changes to processes to be up to standard for the new rules which start to take effect from July this year.
It found that around 7 per cent of firms questioned believe they need to make significant changes while 12 per cent believe they need to make moderate changes.
Around 38 per cent acknowledge they will have to make a few changes.
Key Partnerships said that the new provisions requiring firms to deliver good outcomes for the client with a focus on products, price and value, consumer understanding and consumer support will mean simple informal ‘hand offs’ will no longer be appropriate.
The research revealed that just 22 per cent say they do not need to make any changes as they are already fully compliant while 16 per cent don’t know what changes will need to be made.
Jason Ruse, business development director at Key Partnerships, said: “While some organisations already have successful referral relationships in place, others have taken a more informal approach or been unable to support customers at all.
“Under consumer duty with the requirement to focus on good customer outcomes, a simple hand off will no longer be appropriate so we anticipate that we will see increased interest from a range of organisations.”
Key Partnerships’ report explained how the introducer market differs from the wider market and outlined opportunities for potential introducers expanding their services.
Referral customers typically release more property wealth on average than the wider market at £133,048 compared to £114,354 with some introducers such as accountants recording average amounts of £183,334, the report found.
Around a third (32 per cent) of introducers questioned for the report said they would advise similar firms to themselves who are not referring clients to equity release specialists to consider doing so.
Some 30 per cent said similar firms should speak to the experts on equity release.
Ruse said: “Businesses which need to comply with consumer duty will not be alone in looking to build referral relationships as more and more older customers consider the role that housing equity can play in their later life finances.
“We saw a record £6.3bn released in 2022 by people seeking to manage debt, support families and boost their retirement income as the cost-of-living crisis continues to bite.”
The report asked more than 850 introducers a set of questions since 2019 and in addition over 9,000 Key Partnerships records were reviewed to identify introducer subsets.
Of those, around 7 per cent said offering a referral service is a great way to see if clients are interested and 8 per cent noted that clients are more interested than firms might think.
A further 11 per cent said offering a service is a good additional income stream while 17 per cent said similar firms should consider if equity release could help their clients if they are unable to do so.
sonia.rach@ft.com
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