"As an industry, we must always strive to deliver the best advice possible. And if that means turning down a possible sale - then so be it."
Obviously, covid is still lingering about, but I don’t remember the last time it was top-billing on the news, and I for one I am glad that we may have seen the last of Whitty and co on our televisions. Even if he was an absolute superstar communicator.
But no, these first few months of 2022 do sincerely feel like the real end of covid. We have had a few false dawns before, but this time feels legit to me. This is great news for everyone, but especially good news for business. The rocky road of the last few years has hammered tons of businesses, with many sadly not surviving. For equity release, things have been challenging but we have seen it through admirably - and 2022 has started in record fashion. Some £1.5bn was released in just the first quarter of this year, and if we keep this pace up the lost growth of the pandemic years may be quickly recouped.
However, our industry still has work to do. Growth is one thing, but customer satisfaction remains paramount. And despite our success, there are still some growing pains and problems we have to overcome.
According to recent research from the Financial Services Consumer Panel - who advise the FCA - some customers are being sold products that they later ‘regret and misunderstand’. This is clearly less than ideal. As an industry, focusing on customer satisfaction not just at the point of sale but throughout the life of the policy has to be at the heart of everything we do. Now, you may say this is impossible to guarantee and ‘buyer’s regret’ will always be a factor for some- and I would tend to agree. However, advisers must remember that advice, rather than sales, is their key responsibility.
The Financial Services Consumer Panel’s report found that some of those involved did not fully grasp the commitment they were entering into. While many understood that they did not need to make monthly payments like a regular mortgage, the report claims that the impact of compound interest was ‘not always fully appreciated’. What’s more, some responders were uncertain of the difference between drawdown and lump sum products, and most worryingly of all some of those covered in the report felt they had been pressured into taking a lifetime mortgage or pushed into releasing a larger amount.
Alarm bells should be ringing here. However, the report itself does need a little scrutiny too, as the data itself is drawn from only 45 respondents of whom only 26 were the actual policyholders. So, as other commentators have also pointed out, this is hardly an extensive deep dive into the equity release market and our consumers. However, as a responsible industry, I feel that these concerns should still be met with the same gusto as if it was 26,000 respondents and not just 26.
As an industry, we must always strive to deliver the best advice possible. And if that means turning down a possible sale - then so be it. Equity release, although growing, is still a fringe area of the broader mortgage market and it will only ever be a good fit for a smaller number of clients than the mainstream residential market.
Ultimately, the lifetime mortgage is a specialist product - but one that has a huge and growing client base. There is no need to force it. I sincerely believe that equity release can be the lifeline that thousands of older homeowners need, but we need to ensure that it is helping the right people at the right time.
It’s unfeasible to expect that every customer will leave their initial meeting as clued up as their adviser, but this needs to be the target. We must be confident in our products and the wider offering and rely on spreading knowledge and understanding as our primary sales tool.
Overall, I am certain that most advisers in the equity release industry do an exemplary job - but every one of us needs to be learning and improving all the time. The next crop of retirees will be very different to what many of us think of as ‘old’. The teenagers of the punk era will be drawing their pensions very soon, remember. So we, as advisers and experts, need to be fine tuning our skills every single day. But it is clear to me that everyone who is committed to this industry is serious about customer satisfaction and empowering customers through knowledge and choice and in fact customer satisfaction rates have, historically, been reported to be very high.
