"Many have talked about how they can’t wait to get back to the market as it was pre-Covid-19 when the likelihood is that it’s a market which has gone forever."
Speaking to many property/mortgage/later life lending stakeholders, there is understandably a nervousness about what the next weeks and months will bring, although the positive is that, seemingly with every day, we do make further progress away from a lockdown which effectively closed the market.
That said, I think we also need to be realistic about what does come next. Many have talked about how they can’t wait to get back to the market as it was pre-Covid-19 when the likelihood is that it’s a market which has gone forever.
That was the market as normal back then but normal in the future will be what normal becomes. I’m not speaking in tongues here but the reality of what our future market is, will not be predicated on what it was.
Now that might be worrying for many stakeholders but, I think what all crises’ have taught us, is that we have a great ability to adapt, to learn, to improve, and indeed to make the very best of whatever might be coming over the horizon. With, of course, the added positive that we will have a very great say in how things develop.
So, change has come, and changes will need to be adapted to. Again, in a very real sense, later life advisers have already done that. I read some recent research from lender, more2life, which asked over 350 advisory practices about how they had shifted their proposition since Covid-19 and lockdown, and the changes they were seeing.
Given the nature of lockdown, and particularly its impact on the traditional way advice is provided in the later life sector – namely face-to-face – it was perhaps unsurprising to hear that 26% of advisers had introduced phone-based advice since lockdown was introduced while 43% were now providing it via a video call.
As a result of this, advisers are also heeding warnings about the potential compliance issues that could be raised, particularly if you’re an adviser which has not delivered advice via this method before.
And it’s at this point that we probably need to reflect on the recent FCA review into equity release advice, because there are a number of takeaways that will feed into the way advisers work in the future and the processes the regulator would like see followed.
For instance, one of the key issues raised by the FCA was around the ‘voice’ of the client, the potential lack of ‘personalisation’ when it comes to detailing the reasons why certain products were recommended, and the ability to show that all client circumstances have been taken into account.
Now, that might seem like an obvious part of the advice process, but clearly from the review, the FCA feels this isn’t coming through enough. It says it has seen too many client files which are written in generic text, are not directly relatable to the client needs, and in some cases appear not to have taken them into account. For example, when it comes to clients who have surplus income – the FCA argue that this is not having a direct bearing on the product choice recommended.
Going forward, and with the potential for more remote meetings with clients, one might suggest that these are fully recorded and presented as part of the client file. Indeed, even if the adviser chooses not to record a meeting, the FCA is adamant it wants ‘a record that uses the customer’s own language and phraseology, and contains soft facts that add context’.
All around this is the whole notion of holistic later life advice and whether advisers are able to cover off all options, or just the ones they have authorisation to provide advice on. The FCA seem concerned that more mainstream mortgage options, or RIOs, are not being considered as part of the potential solution, because the adviser is concentrating purely on lifetime mortgages, for example.
This is something we at Air have talked a lot about – the siloed nature of later life advice does not lend itself easily to the provision of an all-encompassing holistic provision, and we continue to support action to help deliver this, preferably in the form of fully-rounded later life qualifications, authorisation and supporting technology which will ensure advisers are able to give advice in the round, not just on one product.
Even without this review, advisers have already been bringing in extra compliance checks particularly to ensure their remote advice is compliant. One might suggest that, now the FCA has voiced its initial concerns, this will need to be combined with a thorough look at what the regulator wants to see, and whether the advisory firm is delivering across all these areas.
In a post-lockdown world, advisers will need to marry up their ability to provide face-to-face advice with the wants and needs of a client base that might think differently. Those individuals who might previously have had no worries or concerns about seeing an adviser in their own home, or at their office, might think rather differently now. Individuals may decide not to expose themselves to close contact with advisers for fear of potentially catching the virus or indeed passing it on to family members. In effect, even if the Government allows it, we as an advisory profession should be braced for the fact that customers may not be ready for it.
How will you as an adviser move forward with a customer in such circumstances? Do you have the set-up, the systems and the processes to keep delivering advice via the phone or video chat? Do those clients have the tech to be able to accept this manner of interaction?
And how can you protect yourself and the client in terms of how you provide the advice, the duty of care you have to clients, understanding potential vulnerability, and other issues that you might naturally have ticked off if you were physically sat in front of the client?
As we move forward, these are not just issues to be thinking about in the future but should be rising to the top of the agenda now. The industry must now work together to ensure the market works well for all.